My Age of Investment

  Chapter 719 How to transfer hatred

   "Now we are going to take down the emperor's new clothes, and turn them into light pigs, naked to show to the world."

  Xia Jingxing stared at the two of them, "You two can talk about your ideas."

   Liu Hai and Jiang Ping glanced at each other. The former smiled and said, “Brother Jiang Ping, your financial knowledge and experience are better than mine, so let’s talk about it first.”

   "Liu Hai, you have a reputation, let's say it first!" Jiang Ping shook his head and declined.

   "Hey, I have only been engaged in securities retail brokerage for a few years, and I have only been in charge of hedge funds for more than two years, and they are all stock trading.

  The assets of the US real estate market have been securitized, and many financial derivatives have been added on this basis.

  In this regard, you are still good at Jiang Ping, with a broader vision and a more comprehensive view of the problem. "

   "You are so exalting me!"

  ……

  Xia Jingxing watched the scene of the two refusing to each other, knowing that they might be fighting in secret.

  Because this involves control of a new fund, no one wants to lose this precious opportunity.

  "Okay, don't say anything there. In response to this action, the company will set up two funds, each with an asset management scale of US$1.5 billion, named Lidong and Dongzhi respectively."

  Hearing this, the two finally stopped fighting.

   "Then let me talk about it first!"

   Liu Hai coughed twice and cleared his throat.

"I think it is necessary to judge the time of the specific collapse of the property market. If you enter the market too early, you may encounter a counterattack. The data is reflected in the fund performance, which will not look good, which will affect the confidence of LPs. If you want to raise new funds, it may be possible. Affect the fundraising plan;

  If you enter the venue too late, you will not be able to lock in sufficient profits. "

  Xia Jingxing nodded, "Then how to determine the time of the crash?"

   Liu Hai replied: “This requires a lot of manpower and material resources to obtain more data for analysis.”

  Xia Jingxing asked: "Okay, this is no problem. The market research team can continue to expand.

   By the way, don’t you still have a fintech team? Let them take the data and make a model. After raising them for so long, it is time to pull them out. "

Since its inception, Lixia Fund has been recruiting mathematicians and computer engineers one after another, aiming to build a top-notch financial technology team, with the purpose of establishing trading models, assisting transactions, analyzing market opportunities, and so on.

  More than two years have passed, this technology team has swallowed all the management fees of Lixia Fund, and no decent results have been produced yet.

   Liu Hai was embarrassed for a while. Over the past two years, Xia Jingxing, as the boss, did not take a penny of profit, and his purpose was self-evident.

  Fintech is a thing that pays attention to long-term investment, and it really won’t make any results for a while.

  But after all, more than two years have passed, and no results have been contributed. It is indeed a bit unreasonable.

   "Okay, I will urge them."

   Liu Hai nodded, took the matter down, and continued to elaborate on his trading strategy.

  "For stocks, directly through short-selling operations, you can make a profit by covering your position when the price is low.

  However, for real estate, it is very difficult to sell short directly.

  Selling real estate securities products, such as shorting real estate company stocks, REITs and real estate mortgage-backed securities, is relatively easy.

  But there will also be a series of problems.

  First of all, the liquidity problem of these securities. In a market with relatively poor liquidity, short selling and subsequent covering positions will have a huge impact on prices.

  Even if this is not so bad that it prevents speculators from establishing positions of sufficient size, it will greatly reduce the profitability of speculators.

  Secondly, when speculators have very large short-selling positions and their behavior is learned by the market, they are easily forced to maliciously force their positions, leading to failure.

  However, the emergence of CDS provides a powerful weapon for market speculation. "

  Speaking of this, Liu Hai paused, "But CDS also has a series of problems.

  First of all, the establishment of a huge position will inevitably have an impact on the price of CDS, and the transaction behavior will convey market information, causing the counterparty of the CDS to have doubts and conduct careful inspection of its original transactions.

  The possible follow-up behavior is to increase the price of the product, or no longer participate in the CDS market, or even go short the market with the backhand, etc.

  Secondly, as the CDS provided by counterparties gradually increases, the risks of counterparties also increase sharply.

  The act of speculators buying CDS can be seen as a bet against the seller.

  The result of speculators betting and winning is the loss of the counterparty. When the speculators bet big and win, it means that the counterparty suffers a big loss.

  In other words, when speculators have huge profits in their positions, they will inevitably have difficulties in fulfilling their contracts with their betting counterparties.

  For example, if we buy CDS from Goldman Sachs, we don't buy much, maybe billions of dollars, but Goldman Sachs actually sold hundreds of billions of products.

  The market value of Goldman Sachs is only 60 billion US dollars. Assuming extreme circumstances, how to solve such a large risk exposure? "

  Xia Jingxing nodded, "I understand what you mean, you are worried that the CDS seller will go bankrupt and behave, and the huge amount of CDS compensation has become a pile of unrecoverable debts."

   Liu Hai sighed, “Yes, there are risks in the transaction itself, and there are risks in cashing out returns. After researching, I found that the risk of this speculation is actually quite large.”

  Xia Jingxing smiled, "I have contacted Goldman Sachs and Morgan Stanley and asked them to design a new product for us..."

   Liu Hai’s eyes lit up, "This is a good idea, then this problem will be solved perfectly."

  Xia Jingxing was very humble, "It's just a part of the solution."

   Liu Hai exclaimed, “That’s also great, it avoids a lot of existing risks.”

  Continued to introduce for a while, Liu Hai said in summary: "In short, the main trading strategy of my plan is to short CDO, short ABX index (subprime mortgage bond price composite index), and long CDS."

  Xia Jingxing nodded. This trading strategy is not complicated. It is an unreservedly bearish housing market. Once the housing market falls, Liu Hai’s three financial products will have major gains.

   Jiang Ping went on to talk about his trading strategy, which was more detailed than Liu Hai’s.

  "...When the real estate market's risk exposure is fully exposed, large-scale debt defaults will inevitably occur. One of these financial institutions will be counted as one, and all of them will not be able to escape. Shorting them will have profit not inferior to the vacant market.

  When all the risks are released, it is possible to set off a round of financial crisis, which in turn will trigger a wave of unemployment and a series of social problems.

  According to the urination of the federal government and the importance of Wall Street to American financial hegemony, the White House may save Wall Street.

  According to the old pattern, if you print money at full force, the dollar will inevitably depreciate, and gold will naturally usher in a wave of market conditions, and financial stocks can also buy bottoms. "

  Hearing Jiang Ping's point of view, Liu Hai felt a little frustrated, and the gap in his level was immediately apparent.

  He only paid attention to the present, but Jiang Ping took one step and looked at three steps, even the latter situation had already been anticipated.

  Xia Jingxing smiled and applauded, "They are all wonderful, especially Jiang Ping, you have taken the situation in the following years into consideration."

  Jiang Ping smiled modestly, “Speculation is not an end, but a means. The purpose of the fund is to maximize profit creation. It should be considered in the long-term.

  Of course, all deductions must be established under the premise of a falling property market.

  At the same time, we need to do more research on the detailed operations.

  If there are variables in the middle, all plans may be disrupted. "

   Seeing Xia Jingxing’s appreciation for Jiang Ping, Liu Hai was appreciative of his heart, and he also had the intention to show it.

   So he asked: "Jingxing, let's do nothing. Once the news spreads, I am afraid that there will be a considerable negative impact?"

"I know!"

  Xia Jingxing put away his smile, his face became heavy.

   "Our success is based on the decline in the property market, and the decline in the property market will cause a financial crisis, and countless people have their houses taken back and become homeless.

  So, we have to be as low-key as possible. "

   Liu Hai shook his head fiercely, “It’s impossible to keep a low profile. We smashed in three billion dollars. If we still use leverage, the movement is definitely not small, especially since we are still “against the general trend”.”

  He looked at Xia Jingxing, then at Jiang Ping, and sighed, "The three of us are still Chinese. Oh, by the way, Jingxing, you are still a foreigner.

  What if we are too dynamic and are pushed out as scapegoats by the culprits of Wall Street who really caused the financial crisis? What should we do? "

  Liu Hai’s words are almost in the heart of Xia Jingxing.

  If he is not a foreigner and is easy to be set up as a target, he would not even think about introducing Gates and other LPs.

  Even if there are Gates and others as LP, they can only solve the problems of delivery and cashing in profits, and the bad reputation will still fall on the head of Vision Capital.

  He has been thinking about how to transfer the hatred.

  (End of this chapter)