Rebirth of the Financial Overlord

"Crack, crack, crack—"

Manhattan, Wall Street.

At three o'clock in the morning Eastern Time, the sound of leather shoes colliding with the marble floor sounded in the corridor on the top floor of the Morgan Building.

In the dead of night, the sound was very loud in the empty corridor, the sound was very rapid, and the frequency was very uneven, indicating that the owner of the leather shoes was very unstable and excited. It was rest time at night, but the owner of the leather shoes hurried away, indicating that he must have been waiting for news that made him emotionally fluctuate, and this news could only come from the other side of the ocean.

The fact is indeed true, for this news from Neon, Anthony Gard and many colleagues have waited for four years.

In November 1988, the neon stock market tripled in five years. According to PE calculations, Anthony Gard, who is the head of the investment department of Morgan Stanley, believes that the neon stock market has still peaked.

Anthony Gard had a good reason.

The logic of the rising neon stock market, one of the most important ones is based on the form of neon goods’ global aggression. With low prices, neon cars, refrigerators, air conditioners and even daily necessities are all over the world. Exaggeration can explain everything, as long as there are people, there are neon products.

Because of the abnormal flooding of the yen, the exchange rate of the yen has been maintained at a very low level, so the neon stock market has been soaring all the way.

But all this came to a halt in 1985.

In 1985, the European and American economies were once dragged into the abyss due to the impact of the Cold War. Coupled with the impact of cheap neon goods, the economies of various countries were even worse. In order to curb the crazy aggression of neon, the four countries continued to exert pressure. The restaurant signed the dollar depreciation agreement.

Over the past two years, under the leadership of various countries, the US dollar has started a journey of depreciation, and the yen has appreciated rapidly.

In 1987, due to the rapid depreciation of the U.S. dollar and the instability of the global exchange rate, the finance ministers and central bank governors of the seven countries reached an agreement at the Louvre in Paris to take joint measures to prevent the decline in the value of the U.S. dollar at that time and maintain the basic stability of the U.S. dollar exchange rate.

As a result, the yen appreciated rapidly again, from 420 to 210, doubling its cumulative value. This means that the settlement of neon goods in global dollars has doubled the price. Price increases and sales will inevitably decline, but for the local neon manufacturing industry, profits have not increased. Judging from the data at that time, in the past few years, Neon's trade surplus has reversed, and the stock market is also at a PE of thousands of times.

Anthony Gard believes that Neon's stock price has still peaked.

His judgment and reasoning have been supported and recognized by most of his peers. After many investigations and discussions, he formulated a comprehensive short-selling plan, stock index put options.

The so-called stock index option is a derivative financial product based on a stock index standardized contract.

The option buyer pays the option seller an option fee to obtain the option to buy or sell a certain stock index contract at a certain price level, that is, the stock index level, at or before a certain time in the future.

Theoretically, the profit of the subscription buyer is unlimited. When the market moves in the direction of the buyer's subscription, unlimited profits can be obtained, while the income of the seller is limited. The maximum profit is the premium paid when the buyer subscribes in the wrong direction.

Yes, it looks like a stupid investment.

Assuming that the premium of the call option is one dollar, then theoretically the maximum profit of the seller is one dollar, while the maximum profit of the buyer is theoretically unlimited.

Is it stupid?

Maybe really stupid.

Because there is a belief in Neon, which is almost religious and persistent. It is impossible for the red stock market to fall. In the 1987 crash, Neon could hold up the global financial market. close. They feel that there is something very special in their market, in the whole people, that can make neon go against all the laws that exist everywhere in the world.

This is an intoxicating neon dream. In the pursuit of the 100,000 mark in all neon, Morgan Stanley joined hands with Salomon Brothers and other investment banks to enter Neon and found major local insurance companies in Neon. companies, and tout their new product, stock index call options.

Even in order to increase the credibility of the stock index call option, the major investment banks went around the Danish king to ensure its gold content and credibility.

As a result, it is naturally a big seller.

In the words of the former Prime Minister of Neon, Americans are an inferior race and extremely stupid.

From the point of view of the major insurance companies of Neon, there is no more stupid investment than selling stock index put options.

If the stock market rises, give one hundred, if the stock market falls, you will lose one.

Such a stupid business, of course you have to buy it.

Then the major insurance companies of Neon bought the stock index options launched by Morgan and Solomon, and the major funds and trust companies of Neon also bought a huge amount of stock index call options.

The reasons are different. From the perspective of major insurance companies, this is a profitable business with no loss. For major public funds and trust companies, this is a good hedging tool for financial products. When the stock market rises, the stock positions held by trust institutions and funds can bring income. If the stock price falls, the purchased stock index put option will perform, and you can get compensation from major foreign investment banks.

It turned out to be a really stupid investment.

Anthony Gard, Morgan Stanley executives, Salomon Brothers and many colleagues did not expect that the horror of neon has exceeded normal economic theory. In the agonizing wait, Salomon Brothers unfortunately reached the brink of bankruptcy in 1990.

Because of the wrong risk estimation, the stock index call options sold by Salomon Brothers exceeded the company's tolerance, and the loss reached 10 billion U.S. dollars, so it could only be acquired by the Traveler Group.

Becoming a giant on Wall Street and an empire in the financial world in the mid-1980s, no one expected that Salomon Brothers would sink under the neon lights, or worse, sink before dawn.

Loss is suffering.

For four years, one by one of his peers went bankrupt or was annexed due to market risks. Anthony Gard suffered so much in his heart.

Now, the four-year wait has finally come to receive the triumphant moment.

"Crack, crack, crack—"

Anthony Gard took excited steps and stopped at the door of the president's office.

The lights in the office were still on.

Who would have thought that in the eyes of outsiders, Wall Street represents extravagance, money and depravity. Overtime work is only a daily routine, and staying up all night or even 72 hours without sleep is common.

Knocking on the office door, Anthony Gard straightened his collar and walked in.

"James, news from Neon."