My 1999

"Cloud business?" Helen blurted out.

Xu Liang looked at her in surprise, "Did you guess it?"

"Facebook is comparable to China's Penguin. When I found that Penguin also established a 'cloud business' department, I knew that Facebook would do the same business in the future."

Xu Liang nodded. "Cloud business includes cloud storage, cloud computing, and even advanced technologies such as artificial intelligence. Any Internet technology company that wants to maintain its position must invest heavily in 'cloud business.'

Xu Liang nodded: "Currently, the fatal weakness of AWS and Azure is "network capacity".

After all, no matter how advanced the level of cloud computing technology is, physical optical fibers are still needed between the data centers of major cloud service giants to achieve data transmission.

Facebook, which owns a fiber optic network, can add DWDM (dense wave multiplexing) equipment at both ends of the optical fiber. DWDM connections can be amplified using optical amplifiers, which is suitable for solutions for large-capacity data transmission and connection.

By connecting data centers around the world through fiber optic networks, Facebook Cloud will be able to provide users with more stable and faster services. "

"If that's the case, we need to invest heavily in fiber optic networks, especially fiber optic networks that span the oceans and connect all English-speaking countries," said Helen.

"Of course, but we don't need to take big steps for now. We just need to develop Facebook's fiber optic network while ensuring that we don't lose money.

When the conflicts between Internet companies and telecom companies become irreconcilable, we will make large investments.

I believe that by that time, Facebook will have already gone public and will no longer be short of funds," said Xu Liang.

You can earn as much as you can from a cheap price. If you can’t make any money, try harder and work alone.

"Um."

——

"Lehman Brothers, $60.05 average price, short 20 million shares."

"Bear Stearns, $74.44 average price, short 18.5 million shares."

"Citigroup, $49.06 average price, short 15 million shares."

"Merrill Lynch, $49.45 average price, short 16 million shares."

"Bank of America, $38.50 average price, 18 million shares shorted."

"AIG Group, $57.91 average price, 22.5 million shares shorted."

"JP Morgan, $45.72 average price, short 13 million shares."

“Morgan Stanley, $47.39 average price, short 14 million shares.”

"Wells Fargo, $28.21 average price, 14 million shares short."

"Wachovia, $37.65 average price, 16.5 million shares shorted."

…

Looking at the printed document on the table, Blankfein scratched his big bald head.

"It's really ruthless! The four largest investment banks, five largest banks in the United States, and AIG, the world's largest insurance group, were all taken down in one fell swoop."

Fabrice Tourre, a vice president of Goldman Sachs sitting opposite Blankfein, spread his hands and said, "Obviously everyone has misunderstood Paulson. There is no doubt that this guy is the biggest short seller."

Blankfein nodded, "He is very pessimistic about the economic situation after the subprime mortgage crisis, and is certain that financial stocks will be the hardest hit.

I just didn’t expect that he was so ruthless that he even went after his old friend Morgan Stanley.”

At this point, Blankfein glanced at his subordinate with a half-smile, "Do you think he shorted Goldman Sachs?"

Fabrice was stunned for a moment, then he reacted, "You mean... we shorted Morgan, and Morgan shorted us?"

Blankfein smiled slightly and said nothing, appearing very calm.

But the younger Fabrice, who is only 29 years old, reacted differently. He was extremely angry and said: "How could he do this? Is he taking us for fools?"

Blankfein waved his hand gently. "That's not necessary. Short selling is a market behavior. If the time is right, I would like to design some Goldman Sachs put options and sell them."

Fabrice was dumbfounded. What kind of outrageous operation was this?

Blankfein laughed.

"You are still young and don't understand many things. I really appreciate the Chinese idiom that Jin Caesar often says - go with the flow."

Fabrice was still in a daze when Blankfein started to chase him away.

"Go ahead and match some counterparties for our big clients.

Without sufficient trading volume, our VIP customers dare not short sell on a large scale, fearing that the stock price will crash.”

Fabrice nodded, stood up and went out.

Blankfein held the documents in his hand, feeling deeply moved.

I had guessed that Jin Caesar would make a big move this time, but I didn't expect it to be this big.

Moreover, he was 100% sure that what Goldman Sachs and Morgan received was definitely not all of Golden Caesar's short contracts, not even half of them.

He must have more funds in financial institutions in the United States, Europe, and even Asia.

But it doesn’t matter, as long as Goldman Sachs can make money.

At the same time, on the other side, Mai Jinheng also received the same document report.

The content is generally consistent with the document in Blankfein's hand. The biggest difference is that the Morgan Stanley column has become Goldman Sachs.

“Goldman Sachs, $198.87 average price, short 12 million shares.”

Seeing this, Mai Jinheng chuckled. They were not stupid. All the financial giants in the United States were gathered here, so how could Morgan be absent?

I can only pretend to be deaf and dumb, after all, business must go on.

——

"Give."

Looking at the information Xu Liang handed over, Helen took it curiously.

"What's this?"

“Financial Report on Phase I of Facebook’s Financial Accounts.”

Helen's eyes lit up and she quickly flipped through the pages.

Facebook's financial accounts have always been controlled by Hongyan. Although she knows that a lot of money has been made, she is not sure how much exactly.

“$5.53 billion?!”

Helen was surprised.

"This is only the income from the first phase. If everything goes well, we will get a generous return in the second phase. Even if it doesn't reach 10 billion after paying taxes, the difference won't be too big."

Helen nodded vigorously. She never doubted her man's ability.

However, compared to the so-called second profit that was still in the planning, the profit that was already in her pocket made her more excited.

“Is this money after tax?”

Xu Liang nodded.

Many of the CDs that Zhurong plans to invest in are investments of more than one or two years, and only need to pay 15% long-term capital gains tax.

Plus the kickbacks given to the top executives of the insurance company.

The funds actually secured by the Zhurong Plan are around 75% of the total returns.

The returns in the United States will be slightly higher.

Xu Liang did not take any further tax avoidance measures.

"This money will be used to expand Facebook, especially to improve the dark fiber plan and continue to promote the pan-entertainment plan. If there is any profit from the second phase, it will be donated to the 'Helen Xu Charity Foundation'."

"Donation?"

"The second phase of investment will last less than a year. Unless we are willing to pay a 35% short-term capital gains tax, donation is the best way to preserve funds," said Xu Liang.

Helen also nodded subconsciously.

She also understands the American financial system.

"The impact of this year's subprime mortgage crisis will be very large. We can use this donation to win the favor of the grassroots and promote Facebook at the same time."

Looking at Helen who was quickly considering how to maximize her benefits, Xu Liang felt quite relieved.

She is already a qualified professional manager.

"I will use the funds from this charity fund to develop an investment plan as a safeguard for our family's wealth in the United States."

Xu Liang briefly talked about his future plans for the charity foundation.

Make the charitable fund into a vegetable basket, filling it with more than 20 high-value stocks, more than ten bonds with relatively stable returns, and some precious metal investments.

Think of this as an oversized hybrid fund.

“In the future, all descendants of the family will be able to work in the charity foundation, which will pay them a high salary each year to ensure they live a wealthy life, but the salary shall not exceed one million US dollars.

At that time, we will donate all our houses to charity funds, and the funds will be responsible for paying the high property taxes, etc.

I think you know the specific operation better than me." Xu Liang said.

Helen nodded. This was how the Montes Family Charity Foundation operated, and she knew very well what was going on.

"The charitable fund provides a safety net for the family. The Facebook Group is a family business. Even if the family business fails, it will not affect the inheritance and wealth of the Xu family." Xu Liang said.

"It's a perfect plan."

Xu Liang shook his head. "Whether it is perfect or not depends on the results. But we still have enough time to implement and change it."

"Um."

After chatting for a while, Helen checked the time.

"I'm going to have an online meeting with Netflix's top executives. Do you want to join us?"

"No, go and get busy."

In fact, Xu Liang also had a meeting to attend.

After seeing Helen off, Xu Liang came to the villa meeting room.

The figures of Hongyan COO Xia Changsheng, Hanhua Hong Kong Office Director Sun Zhenping, and Hanhua Pacific Fund Director Qiu Heng appeared on the surround display screen.

"Mr. Xu."

Seeing him come in, the three of them hurriedly greeted him.

The latest novel is published first on Liu9shuba!

Xu Liang nodded in greeting and sat down in the middle.

In front of him was the latest progress of Hanhua and Hongyan's "Zhurong Project".

It held a short position of $3.325 billion in Lehman Brothers and $3.14 billion in Bear Stearns...

Morgan Stanley holds $1.895 billion, Goldman Sachs holds $1.987 billion...

The five largest banks, the five largest investment banks, plus AIG, the American International Group, hold a total of US$27.95 billion in short positions on these 11 largest financial institutions in the United States.

If we include other listed financial institutions, insurance companies, real estate companies, etc. in the United States.

Through hundreds of shadow funds and institutions under its umbrella, Hongyan holds a total short position of more than US$150 billion, accounting for half of Hongyan's total global short position.

The second largest country in the world in terms of GDP is Japan, which accounts for more than 30 billion US dollars.

The rest are mostly in Europe.

Asia outside South America and Japan accounted for more than 50 billion US dollars.

This does not include the mainland.

China currently does not have a short-selling mechanism, and even if it does, Xu Liang will not do it.

A rabbit doesn't eat grass near its burrow.

You can have fun out there, but make sure you keep a way out.

After looking at it for a while, Xu Liang put down the information.

"We gathered you here today to discuss the follow-up investment of the Zhurong Project. ... Sister Li, please briefly describe the current situation."

Li Jinling nodded and said, “At present, the risk exposure of Goldman Sachs and Morgan Stanley has been exposed a lot.

Morgan Stanley suffered huge losses, but Goldman Sachs' financial report still showed profits, so there should be limited room for the stock price to fall.

Lehman, Bear Stearns and Merrill Lynch had greater exposure than them.

Especially Lehman and Bear Stearns. According to our multiple data models, each of them suffered losses of more than 20 billion US dollars. Without external capital support, bankruptcy is a high probability.

Therefore, our next short selling focus should be Lehman, Bear Stearns and Merrill Lynch. "

After looking at the expressions of the big boss and everyone in the video, Li Jinling continued.

"Investment banks were the first to be exposed to risks last year and this year. Once the impact of the subprime mortgage crisis continues to expand, the banking industry will take over from investment banks, so the banking industry is also the focus of our attention in the future."

Xu Liang nodded slightly: "At present, we have invested nearly 9 billion US dollars in 11 large financial institutions in the United States for short selling, and another 7.7 billion US dollars for short selling some regional banks and special financial institutions, such as Fannie Mae and Freddie Mac.

But... that's not enough.

Our funds are too large. The total amount of short-selling funds of Hongyan and Hanhua is no less than 500 billion US dollars after leverage. We need more investment channels and targets. "

Xia Changsheng said calmly: "Boss Xu, in the current market, we cannot short sell too many stocks, otherwise it will cause drastic fluctuations in the stock price, which will not only alert the shorted companies, but also easily affect the final short-selling profits.

However, Goldman Sachs and Morgan Stanley have recently been actively helping us to broker some "put option" trades.

I think I can try to short sell by buying a large number of put options later.”

Xu Liang nodded slightly. The options here are different from those of start-up companies. They are circulated in the secondary market.

As a financial derivative, options are divided into call and put options. At the same time, because they involve buyers and sellers, they are divided into four trading strategies:

Buy a put option, and the counterparty sells a put option;

Buy a call option and the counterparty sells a call option.

"Mr. Xu, Berkshire Hathaway has been selling a large number of put contracts on the S\u0026P 500 index recently. Perhaps we can take over the opportunity." Sun Zhenping said.

Xu Liang's mind moved, "How long is the deadline?"

"Contracts ranging from 15 to 20 years."

Xu Liang frowned, the deadline was too long.

Except for long-term funds such as pension and retirement funds, no institution would buy contracts for such a long time.

Sun Zhenping also knew that the deadline was a bit long, so he didn't say anything else.

Qiu Heng laughed and said, "Most people think that Buffett is a fan of value investing, but they don't know that he is also a speculator, especially an expert in options."

Xu Liang smiled.

To be honest, his stereotype of Buffett was that his investment philosophy was to consistently implement "value investing." It was not until he entered the financial circle and learned enough about it that he realized what this old guy was really doing behind the scenes.

In April 1993, when Coca-Cola's stock price was hovering around $40, Buffett sold 5 million put options with an exercise price of $35 and an expiration date of December of that year for $1.5.

In the end, Coca-Cola's stock price fluctuated around $40-45 for the entire year, and never fell below $35.

So no one is willing to exercise the put option and sell Coca-Cola shares to Buffett at $35.

The option was therefore directly invalidated, and Buffett earned the $7.5 million in option fee income effortlessly.

There are many similar operations.

However, based on his understanding of Buffett, Buffett's main purpose of selling Coca-Cola should not be simply to earn an option fee, but because he thinks Coca-Cola's stock price is a bit expensive and he wants to buy it at the psychological expected price of $35.

Although I didn't buy it in the end, I did receive an option fee as a consolation.

The risk of the entire transaction lies in that if the share price of Coca-Cola falls below $35, for example, to $25, the counterparty will definitely exercise the option. Buffett can only tearfully buy 5 million shares at a price $10 higher than the market price, that is, the agreed exercise price of the option of $35, resulting in a direct loss of $50 million.

The $7.5 million in option fees does not need to be refunded, which can offset the loss slightly, but the loss is still more than $40 million.

However, it is obvious that Buffett is very confident in his judgment of Coca-Cola's stock price and is optimistic about its future stock price trend, so he dared to sell put options.

Similarly, institutions that dare to sell put options on financial institutions such as Lehman Brothers and Bear Stearns are definitely showing their confidence in these companies.

It’s just that the major investment banks are having a hard time right now, and I’m afraid it’s hard to find such a loyal counterparty.

Xu Liang expressed his thoughts.

Sun Zhenping said: "That's true, but we can set the option strike price lower.

Take Goldman Sachs for example. The company's current stock price is nearly $200. Although they have a bad reputation and there are even voices saying they will be investigated and prosecuted, they are in good financial condition and have the best fundamentals among the top five investment banks.

What do you say we set the option strike price to $100?

Can we attract a group of counterparties to sell us some put options?

If the option premium is $20, this cost must also be taken into account.

That is to say, Goldman Sachs’ stock price has to fall below $80 before we can make a profit.

Compared with Goldman Sachs' current stock price, we need to see a 60% drop for us to win.

Is this attractive enough?

In the eyes of most people, they should have a greater chance of winning. "

Xia Changsheng asked: "Isn't it too risky to do this?"

“The risk is a bit high, but if the subprime mortgage crisis breaks out as expected, our chances of winning are more than 70%.

And I'm just giving an example, don't take it seriously.

When it comes to pricing of derivatives, it must be calculated using various formulas," said Sun Zhenping.

Xu Liang thought about it carefully and realized that this was actually a kind of gamble, a gamble on stock price expectations.

Whoever has better and more accurate vision will be the winner.

Moreover, if you play options well, you can make much more money than directly shorting the underlying stock.

But the risk is very high. Ninety percent of the put options purchased are free money. To put it bluntly, it is speculation, just like buying lottery tickets.

However, there are exceptions. When faced with a once-in-a-century opportunity like the subprime mortgage crisis, many of the counterparties' formulas, calculations, and analyses... all become invalid.

"You can give it a try with some of the funds, but you have to show me the final plan first."

Xu Liang was not very confident about making a profit through put options, because to succeed he needed to judge many conditions such as time and strike price.

The most important thing is that I have never played it, so I don’t have any confidence.

However, he still remembers the time when Lehman Brothers collapsed, and he also remembers that the share prices of several stocks fell to $1.

So as a supplement to the equity market, it should be sufficient.

The key is whether there is anyone willing to play against him.