The operation here is non-stop 24 hours a day, so after watching it for a while, Yang Jing returned to his room satisfied, and Henry, David, and Cesar also followed.Yang Jing personally poured a glass of champagne for everyone, and then picked up the wine glass and said with a smile: "Come, cheers to our brilliance!"
”"Cheers to our splendor!"
The three of them raised their glasses and said in unison.The result of this investment or speculation is very brilliant, after the three major markets were launched, the three major investment institutions under the name of the Dragon Fund have made huge profits in these three markets.In terms of international gold and international crude oil futures alone, the profit of the Dragon Fund has exceeded the market value of a General Electric!
Although the global financial crisis caused by the subprime mortgage crisis has not yet reached its climax, the KY investment fund, which is disguised by international funds, has made a profit of more than $200 billion just from shorting the US subprime mortgage and the US stock market!
Their speculative action is absolutely brilliant.After taking a sip of wine, Henry smiled and said, "It's a pity that the outside world is amazed by John Paulson's profits, and they never know that John Paulson's Paulson Fund is only a fraction of the profits compared to us." ”Cesar also laughed, "Don't forget, we're an international traveler. ”One sentence amused everyone at the scene, and even David, who usually doesn't smile, laughed heartily.Not to mention the profits of the international gold and international crude oil futures markets, the short of the US subprime mortgage and the short of the US stock market alone made the profits of the KY investment fund exceed the US stock market crash in 1987, and this is just the beginning.The subprime mortgage crisis in the United States has begun to detonate the global financial market, and a financial crisis that has swept the world is inevitably about to erupt, which is the battlefield for KY Investment Fund and Pacific Capital to obtain greater profits in the future."
You've got that little guys doing a great job, and we've got a John Paulson in front of us to attract attention, so we're going to be safer this time."
Yang Jing said with a smile.It's not that Yang Jing said this nonsense, but it is actually an extremely dangerous thing for the United States to make a fortune.If it weren't for the KY Investment Fund's "initiative" to come out and buy back a large number of shares, maybe Henry would have been invited by the U.S. government to have tea at that time.The same is true of the subprime mortgage crisis, but compared with the stock market crash 20 years ago, the financial regulation in the United States has become more relaxed at this time, and it coincides with the later known as the "empty god" John Paulson in front, so this KY investment fund is like a fish in water in the subprime mortgage crisis.From the mid-to-late 90s of the last century to the first decade of the new century, there were two "Paulsons" on Wall Street who were well-known, one was Henry Paulson, the former chairman and CEO of Goldman Sachs and served as the US Treasury Secretary in 2006, and the other was John Paulson, who made a fortune because of shorting subprime mortgages in the subprime mortgage crisis and was known as the "empty god" by later generations.Before the subprime mortgage crisis broke out, John Paulson was not well-known on Wall Street until he met his old friend Paul Pellegrini in 2004, two guys with the same smell saw the huge bubble in the U.S. real estate market, and then decisively shorted the subprime mortgage, and finally he put down a heavy bet of $25 billion in the U.S. real estate market to short the U.S. subprime mortgage, and then it took more than a year for the $25 billion to become $45 billion, with a direct profit of up to $20 billion.John Paulson was also hailed as a "hollow god" by others because of this shorting.In fact, John Paulson's success could not have been achieved without Paul Pellegrini.Paolo Pellegrini was born in Italy and moved to Wall Street in the '80s, where he worked as a mid-stream investor at Lazard Brothers, where he tried his hand at venture capital several times.It was also at that time that he met John Paulson, who had been working at Bear Stearns.At that time, the two of them could only be regarded as two small shrimps on Wall Street.Unlike John Paulson, Pellegrini worked as a broker after leaving the Zaald brothers, but all of them did not go well, and both of his marriages failed.Even before he met John Paulson again in 2004, the guy was in a state of unemployment.However, after many years of experience in the workplace, Pellegrini has developed outstanding financial analysis skills, which has created his unique investment thinking, he is no longer subject to the rules and regulations of the Wall Street financial system, and no longer relies entirely on credit ratings and rating agency ratings, but collects a large amount of financial information for his own comprehensive analysis, and uses it as the basis for investment judgment.And when the two met again, John Paulson's life was not very comfortable.After four years at Bear Stearns, Paulson decided to transition from investment banking to fund management and began his fund management career as a partner at Grus Partners.In 1994, he saw the momentum of hedge funds and shared an office with several other small hedge funds to create Paulson Hedge Fund, which specializes in M&A arbitrage and event-driven investing.In those years, Paulson's small life was quite good, especially at the beginning of the new century, Paulson saw the huge bubble in the Internet, and decisively began to short the Internet, which made his Paulson fund profit of more than $5 per year in the first two years of the new century, and the size of his fund also increased to $600 million.The Paulson Fund's performance in the dot-com bubble burst attracted many investors, and by 2005, the Paulson Fund had grown to $4 billion.Even though the size of the fund has increased nearly sevenfold, Paulson still finds it uncomfortable.Why?
Quite simply, because Paulson felt a little aimless.This is the worst part of the hedge fund, because he is in charge of a hedge fund with a scale of $4 billion, but he does not know the direction of investment, which will inevitably cause dissatisfaction among investors after a long time.At this time, the U.S. economy was red, especially the real estate market, which was very hot, but Paulson was not interested in the U.S. real estate market.He doesn't wade through the muddy waters of mortgage loans, financial derivatives and real estate, and he stays out of most of the real estate boom, so does he have any goals?
So, when he met Pellegrini, Paulson's life was not comfortable.But at this time, he met Pellegrini, an old friend of his who showed him the way.Although Pellegrini is in the state of his career, his sense of smell has always been very acute.Especially the boom in the U.S. real estate market in the past two years has made him smell something unusual.As a result, Pellegrini began to study the U.S. real estate market.He has studied interest rates over decades and found that they have had little impact on the housing market.This means that, despite all the whitewashing of bullish claims, the Fed's interest rate cuts are not at all a reason for the recent surge in home prices.But after reading academics, government literature and data, Pellegrini was frustrated: he couldn't quantify the extent to which house prices were worth the money, and he didn't know when the bubble began.He couldn't even prove that the price increase was different from the past.To draw new conclusions, Pellegrini added a "trend curve" to the housing market data, which clearly shows the extent of recent price increases in the housing market.This time, Pellegrini took a step back and looked at a longer period of history, looking for property data for each year since 1975 and suddenly, the answer came to fruition: from 1975 to 2000, after adjusting for inflation, the annual increase in home prices in the United States was only 14.But in the six years from 2000 to 2005, U.S. home prices soared by more than 7 per year!
In other words, U.S. home prices need to shrink by 40% to match historical trends!
The extent of this rise in house prices is unprecedented, and Pellegrini has also found that every time house prices fall in history, they fall below the trend line, which means that if house prices do fall at this point, it will really plummet.When Manuel Pellegrini shared the results of his analysis with Paulson, Paulson, who was naturally stupid and bold, immediately realized that this was a once-in-a-lifetime opportunity.At the beginning of 2006, it was widely believed that home prices would never fall across the United States; Mortgage experts continue to advocate that the property market and the housing mortgage market will continue to be booming; The good news is frequently seen in the major media.The vast majority of Wall Street's biggest names are on the same page.Credit rating agencies have also assigned AAA ratings to Wall Street's financial products."
Experts are blinded by the boom in the real estate market."
After getting the results of Pellegrini's analysis, John?
Paulson resolutely discarded the rating agencies, and personally led his team of 45 people to track thousands of mortgages and analyze the details of the personal loans he could get.As he progressed, Paulson became more convinced that investors were significantly underestimating the risks in the mortgage market, and that it was becoming increasingly difficult for creditors to recover their loans.Prior to the subprime mortgage crisis, the relationship between CDOs and CDSs in the U.S. housing market was such that the higher the risk of the CDO, the higher the value of the CDS guaranteed for it.But during the property boom, the vast majority of people thought that CDOs were not too risky, so the price of CDS was very low.So Paulson decisively invested $1.5 billion in July 2006 to establish the first fund to short CDOs, and began to build a large number of positions.At the same time, he shorted dangerous CDOs while buying cheap CDS.Paulson's team began rummaging through the market for low-quality CDOs, dangerous CDOs, and his goal was not the healthiest, most mature at all, but the kind of credentials that no one could recover.They then purchase CDS insurance contracts for these CDO shares."
Man, do you want the CDO of New Century Finance?""
Nonsense, such garbage oh no, of course I want such a superb cdo, I want as much as I want!""
What about scammer loans and interest-only loans?""
Farke, do you need to talk about that?
Give it to Lao Tzu, as many as you want!
”"Dude, do you want a CDO for mortgage loans in the overheated housing markets in California and Nevada?""
Yo, how much do you have there?
I want them all" Paulson scavenged the high-risk CDOs and cheap CDS in a hot real estate market, and his actions even sparked a chorus of ridicule on Wall Street.Especially in the months that followed, the U.S. housing market continued to boom and showed no signs of malaise, so Paulson's fund continued to lose money — and he continued to pour more than a billion dollars.Some investors hurriedly asked him several times if he should stop the loss.He flatly refused: "No, I'm going to raise." ”Paulson did what he said he would, and he even went so far as to set up a second fund to short CDOs and continue to invest more.Paulson's approach drew much ridicule and ridicule at the time, but he persisted in doing so, with the air of a drunken crowd that was heard by thousands of people.But his desperate approach did not disappoint him, even when he lost more than a billion dollars between July 2006 and the end of 2006.In the end, his persistence brought him a huge fortune!
The subprime mortgage crisis finally broke out, and Paulson, who had prepared a large number of short positions in advance, finally got the huge return he deserved in this subprime mortgage crisis - $20 billion!