The Great Sage Returns from Ten Years of Imprisonment

Ling Yunchong nodded to Director Li, cleared his throat, and continued his bombardment of the audience.

Before delving into Goldman Sachs' hedging strategy, let me set the tone for what I'm about to say.

As he spoke, he lightly tapped the table with his fingertips.

"The subprime crisis, which is currently escalating, will, at most, develop into a global financial crisis in two or three months."

"At that time, all risky assets will be sold off frantically, with stocks and crude oil futures bearing the brunt."

"International oil prices will plummet to tens of dollars in a very short time, falling below the put option strike price agreed upon by airlines and Goldman Sachs—it's a certainty!"

The moment the last word was uttered, there was a loud crash, and the teacup in the Shanghai Airlines CEO's hand fell to the ground, splashing water all over his trouser leg.

He jumped up from the chair and hurriedly dodged.

Fortunately, the tea in the cup was no longer hot, and it did not cause any harm.

The conference room felt as if a depth charge had been dropped on it.

Unconsciously, Mr. Li, the general manager of China Eastern Airlines, poked a small hole in the notebook with his pen.

"Xiao Ling, what you're saying is outrageous!"

Mr. Li slammed the pen down on the table, the metal cap making a crisp sound.

"A global financial crisis? You can't just make that up on a whim."

Ling Yun turned to look at him and nodded confidently in greeting.

"Mr. Li thinks it's normal for people to be alarmist, but facts speak louder than words, after all, two or three months will pass in the blink of an eye."

If China Eastern Airlines is undecided, it can wait until the financial crisis erupts before making a decision, hoping that it will still be in time to remedy the situation.

"If international oil prices fall below the put option strike price, you will have to provide Goldman Sachs with over $100 million in margin for every dollar the price drops, and your losses will increase exponentially."

Mr. Li was stunned for a moment, his face turned black instantly, and his mouth twitched.

"Cough cough"

Mr. Kong coughed lightly a few times, reminding Ling Yun to be more discreet.

At that moment, the investment director of China Southern Airlines suddenly spoke up to refute.

"US Treasury Secretary Paulson just issued a statement last week declaring that the US economy will accelerate its growth later this year, and the former Federal Reserve Chairman also said that the worst of the subprime crisis is over."

"Xiao Ling, do you think we should believe the US Treasury Secretary's official statement, or your exclusive prediction, made by this young talent, that a global financial crisis is about to erupt?"

When he mentioned the words "young talents," he smiled meaningfully.

Someone chuckled softly in the conference room, but was immediately silenced by a cold, sharp look from Director Li.

Ling Yun smiled and tapped his fingers lightly on the edge of the table twice.

"Mr. Xu, to judge a person's stance, you should look at what they do, not what they say."

"Don't forget, this is a US election year, and Paulson will step down as Treasury Secretary next January. He needs to pave the way for his return to Wall Street."

"He's the former CEO of Goldman Sachs, holding Goldman Sachs stock and a hefty retirement pension. His position dictates his thinking; that's a simple concept."

These words were like a thunderclap, instantly tearing through the fog.

The director of the Civil Aviation Administration of China sat up abruptly and subconsciously loosened his tie.

Director Li quickly exchanged a glance with him, and they both saw a hint of shock in each other's eyes.

This kid has a great vision and a broad perspective!

Ling Yun leaned forward, his voice suddenly rising.

"If the US economy were truly improving, would General Motors be on the verge of bankruptcy? Would Goldman Sachs be aggressively shorting Bear Stearns, Lehman Brothers, and Merrill Lynch?"

He paused, his gaze sweeping across the entire room.

"Lehman Brothers, in particular, is completely beyond saving and will probably go bankrupt within a month or two. Merrill Lynch will either be acquired or file for bankruptcy protection."

"These are all top investment banks on Wall Street. The collapse of Merrill Lynch and Lehman Brothers will inevitably trigger a massive financial tsunami."

The air suddenly froze, and the meeting room fell into a deathly silence!

Director Xu opened his mouth, but no sound came out.

He did see the news last night about Goldman Sachs aggressively shorting its Wall Street counterparts, which caused a stir in the financial world, but he didn't think about it too deeply.

The investment directors of each airline looked grave, and they all felt a little uneasy.

With the innate advantages of being reborn, Ling Yun's grasp of global economic and financial market trends is far superior to theirs!

"cough"

Director Li coughed lightly, breaking the silence.

"Comrade Xiaoling's analysis is very insightful, and we will study it in detail. Now, let's get back to the main topic. What specific solutions do you have?"

"brush!"

All eyes immediately focused on Ling Yun, curious about what kind of solution he would come up with.

Ling Yun looked around and slowly spoke.

"After careful study, I believe that the airlines made the following three major mistakes when signing this hedging strategy with Goldman Sachs."

"The biggest mistake is turning hedging into gambling on price fluctuations. The original intention of airlines to hedge is to lock in fuel costs, not to gamble."

"The result is a three-year bet on 50% to 80% of fuel demand, which is essentially speculation. What's the difference between that and gambling on big or small at a casino?"

"cough cough cough"

Mr. Kong immediately started coughing and frantically tried to signal to Ling Yun with his eyes.

This isn't giving advice, it's practically stabbing me in the back! It's utterly insensitive!

as predicted!

Several airline investment directors blushed instantly, one of them flipping through the meeting minutes loudly to cover his embarrassment.

It was they who ultimately finalized and signed this hedging strategy with Goldman Sachs.

As a result, hedging turned into speculation, no wonder it was so embarrassing!

There's no turning back now that the arrow has been released; Ling Yun is completely going all in.

"The second biggest mistake was blindly trusting the research reports from other firms. If Goldman Sachs said oil prices could break $200, why would they bet against airlines that prices would fall? That doesn't make sense!"

"In the financial markets, we shouldn't listen to what institutions say, but rather look at what they do. If Goldman Sachs is pushing bullish plans for various airlines, then they must be preparing to short oil prices on a large scale."

"Pfft"

Secretary Zhou couldn't help but burst out laughing.

He quickly covered his mouth and pretended to sneeze, but his shoulders kept trembling slightly.

China Eastern Airlines' General Manager Li's fingers were clenched so tightly they turned white, and the meeting minutes on the table were wrinkled from his grip.

The third major mistake: not setting stop-loss orders.

Ling Yun's voice was as precise as a scalpel, a direct slap in the face.

"This is a major taboo in financial trading. It's like being unwilling to cut your losses in the stock market; in the end, you lose more and more, get trapped deeper and deeper, and have nowhere to turn to for help!"

These words immediately shattered everyone's psychological defenses.

"Alas, it turns out we're utterly useless!"

China Southern Airlines' General Manager Wang sighed heavily and slammed his pen onto the conference table.

"Stop bringing up the past, just tell me the solution!"

Seeing the awkward expressions on the faces of the airline executives, Mr. Kong felt incredibly satisfied!

All the gloom from the past few days vanished in an instant, leaving me feeling refreshed!

Although he was secretly pleased, he still coughed lightly twice to remind Ling Yun to take it easy.

Don't offend the bosses too much; leave them some face.

Otherwise, be careful not to get blacklisted by airlines, and you'll have a hard time flying in the future.

Ling Yun ignored President Kong's reminder and finally revealed his solution.

"To resolve the current crisis facing various airlines, I have come up with a few solutions. Leaders and executives, please listen to them; the decision is yours."

"The first option is to cut your losses decisively and pay the penalty for breach of contract to get out of the trap. It's better than losing tens of billions in the future. But it seems that the probability of this option being approved is basically zero."

"The second method,..."

He paused deliberately for two seconds before revealing the answer.

"To compensate for losses within the dike, each airline should contribute some funds to form an investment team to secretly short international oil prices and recoup all the default penalties they would have to pay."

"Whoa!"

A gasp of surprise erupted in the meeting room.

"Given that the downside losses from this hedging strategy can be amplified indefinitely, a stop-loss line must be set. For example, if international oil prices fall below $80, the hedging strategy should be terminated immediately."

Ling Yun continued to speak eloquently.

"Judging from the current oil price trend, before international oil prices fall to $80, there is a good chance to earn enough default penalties by shorting, and possibly even make a fortune."

These words were like a beacon suddenly lit in the darkness, giving everyone hope.

"Splash!"

Mr. Li, the general manager of China Eastern Airlines, and Mr. Wang, the general manager of China Southern Airlines, simultaneously pushed back their chairs and stood up abruptly.

"Xiao Ling, tell me more about the second solution. It sounds very feasible!"