Sha Zhu's Rebirth in the Courtyard: Starting with Hitting Someone in the Head

Chapter 412 The Collapse of a Top Investment Bank

In March 2008, temperatures in the south had warmed up, and spring was in full bloom. After two months of emergency repairs, reconstruction, and logistical support, roads were fully reopened, and the power grid was gradually restored.

People's lives have returned to stability, market prices have stabilized, and all sectors of society are gradually recovering. The whole country is experiencing a stable scene of post-disaster recovery and prosperity.

In the face of this natural disaster, Zhonghuan Group was the only company in the country that anticipated it in advance, made early arrangements, and provided full support. This has further enhanced the He family's reputation, heritage, and network of connections.

Xu Damao's nationwide chain supermarkets locked prices and ensured supply during the disaster, and donated a large amount of warm clothing and dry food to the disaster area free of charge, without making a single penny of profit from the national crisis.

The Ma Family Restaurant, run by the Ma brothers, Ma Hua and Ma Qiang, provides free hot meals and soup 24 hours a day at all its branches in the south to support stranded travelers and frontline repair workers. They have also donated millions of dollars in cash to help with reconstruction.

Having weathered this natural disaster, Da Mao Supermarket and Ma Jia Restaurant have become more stable and united. These two brands have truly entered the hearts of millions of people, becoming national brands.

The He family in the capital was filled with righteousness and had a solemn family tradition.

At the National Martial Arts Base, the He family guards and their grandchildren learn Chinese culture, understand the principles of family and country, cultivate themselves, practice martial arts, establish virtue, and comprehend reason.

He Yuzhu used this snow disaster to teach these children about responsibility and patriotism. He let them see with their own eyes that their family's wealth and ability were not used for extravagant enjoyment, but rather to step forward and help others in times of crisis.

Internally, it cultivates people and establishes a solid foundation; externally, it builds a good reputation.

The entire Ho family was extremely stable at the beginning of 2008.

While life in China was peaceful and everything was renewed, thousands of miles away on Wall Street in the United States, undercurrents completely broke through the disguise, and a global financial disaster officially tore open the first bloody wound.

Having weathered the turbulent ups and downs of 2007 and the repeated interventions by the central bank, all remaining hope in the market was shattered in March 2008.

Bear Stearns, a top investment bank that once consistently ranked among the top five on Wall Street and stood for nearly a century.

With liquidity dried up and the capital chain completely broken, this giant, which had witnessed several financial cycles and was regarded by countless investors as the cornerstone of stability, was on the verge of bankruptcy overnight.

（ 真实资料：07年四月份贝尔斯登最高159美元，08年03月16日：摩根大通官宣收购报价 2美元，全世界新闻大肆报导。

后来股东闹得太兇，美联储兜底290‑300亿有毒资产为条件，3月18日成交抬到10美元一股。 ）

Finally, with the Federal Reserve's emergency intervention, it was forcibly acquired by JPMorgan Chase at an extremely low price, almost like a freebie.

This is on a completely different level from the collapse of two major funds under Bear Stearns in 2007.

Last year, only subprime lending institutions and some small hedge funds were involved in the problems. The market could comfort itself by thinking that it was a localized, minor risk or a case of poor management by a few institutions.

This year marked the acquisition of Bear Stearns. It was a true Wall Street giant, a top-tier financial power.

The fact that even a century-old investment bank of this size could collapse in an instant has directly severed confidence in the global capital market.

For the first time in the world, a genuine collective financial panic ensued.

European and American stock markets plummeted across the board, major investment banks frantically conducted self-examinations of risk control, hedge funds reduced their positions and fled regardless of cost, Hong Kong stocks and offshore markets followed suit, and the entire global financial community was in a state of panic and sleepless nights.

For the first time, countless financial veterans with decades of experience felt an unprecedented chill, and everyone was asking the same question:

Who will be next to fall?

At this moment, in the study of a courtyard house in Beijing, the financial terminal is constantly updating data on the US stock market crash, news of Bear Stearns' collapse, and real-time CDS quotes.

He Yuzhu sat upright at his desk, his expression calm and composed, showing no surprise whatsoever; everything was exactly the same as the original historical data.

Just then, the encrypted dedicated line phone on the table vibrated and rang; it was He Xin.

There was no panic on the other end of the phone, only a hint of barely concealed hesitation and caution.

"Dad, Bear Stearns has completely collapsed. The Federal Reserve intervened to rescue the market and take over. The CDS positions we set up last year have seen a significant increase in unrealized profits, with a very considerable rise."

He Xin spoke calmly, expressing her most genuine concerns:

"But the market situation is very delicate right now. As soon as the news of the market rescue came out, the market panic was temporarily relieved, and the US stock market began to show a technical rebound. The real-time quotes of CDS have already fallen slightly."

"I'm worried that if this rebound continues, our current huge unrealized profits will gradually be eroded and shrink. I'd like to ask you if it's possible to cash out most of our positions now, lock in our current profits in advance, and prevent our paper gains from turning into nothing?"

This is a very professional and rational question.

Any trader seeing a floating profit of tens of billions would immediately think of taking the profits and securing them.

After listening, He Yuzhu simply spoke, his tone resolute, directly pointing out the key to the whole situation:

"We absolutely cannot liquidate our positions on a large scale now, let alone clear them all out."

He Xin was slightly taken aback, but listened patiently.

He Yuzhu continued to explain: "Remember our established complete plan: 400 billion yuan of principal will be invested in CDS (credit default swaps), with a target of 1200 billion yuan in net profit."

"The collapse of Bear Stearns is just the first domino to fall in the subprime crisis. The most crucial point is that this domino was forcibly propped up by the Federal Reserve."

"The current market rebound is driven by wishful thinking. Everyone believes that the Fed's bailout is effective, the risks are under control, and the crisis is about to end, so funds dare to enter the market to buy at the bottom, and the panic has temporarily subsided."

"But we both know that the underlying subprime bad debt black hole, the cancer of financial leverage, and the systemic risks of institutions have not been resolved at all; they have only been temporarily covered up."

He Yuzhu's gaze fell on the fluctuating betting data on the terminal, his tone calm:

"Even if we clear out all our positions now, we can only make a maximum profit of 500 billion. That seems like a lot, but it's still far from our target."

"The most terrifying, the most insane, and the most profitable ultimate market trend is yet to come."

"Let me tell you, the real systemic destruction was Lehman Brothers. When Lehman collapsed, the Federal Reserve completely abandoned its bailout, and the global financial chain broke down, that will be the true final tsunami of the subprime crisis, and the only time when our CDS profits will peak and we can perfectly realize our goals."

He Xin on the other end of the phone instantly understood.

He was so focused on the immediate fluctuations in the market that he was worried about losing his profits, and he was almost blinded by short-term market movements.

Temporary ups and downs, profits and losses are minor matters; the fixed strategic target of 100 billion for the whole year is the real issue.

"I understand, Dad!" He Xin's tone calmed down. "I was too narrow-minded, only seeing the immediate risk of a rebound. So, are we just going to do nothing and hold on until Lehman Brothers collapses?"

"It's not about leaving it completely still," He Yuzhu said in a softened tone, setting a perfect compromise:

"The main force holds 80% of its position, locked in and unmoved, enduring all fluctuations, rebounds, and unrealized profit swings, determined to hold on to the end and wait for the final storm in September. The remaining 20% ​​of the position can be closed out directly."

"This portion of the profits will not be reinvested in any way, but will be allocated separately to a global bottom-fishing arsenal."

If the market subsequently experiences a slight decline and reaches a temporary low point, we can use this additional capital to make a small, tentative entry and position ourselves in advance.

After careful consideration, He Xin realized that this approach would allow him to retain the majority of future profits in the hundreds of billions while securing some current gains and strengthening his financial foundation, demonstrating a balanced approach that was both offensive and defensive.

"Received! I will carry it out strictly." He Xin replied solemnly, all the restlessness and confusion in his heart dissipating, and his mindset completely stabilizing.

After hanging up the phone, the study returned to quiet.

Looking at the fluctuating and seemingly stable yet actually precarious US stock market curve on the terminal, He Yuzhu felt absolutely certain.

The game of chess in 2008 was clearly divided into two parts, the light and the dark.

Domestically, the storm has passed, and the He family's foundation is as solid as a rock, with its roots growing ever deeper.

Overseas, giants are collapsing, dominoes are beginning to fall, and undercurrents are surging; the financial storm has only just begun to show its fangs.