1928: The rise of giant merchants

Ye Luo also helped Huixin prepare the asset certificate.

When he saw the estimated total assets of US$10 million clearly written on the document, Benjamin's heart beat violently.

This woman is really rich.

No wonder he dared to spend $3 million to short stocks.

Also need to leverage.

With all the procedures in place, Benjamin could no longer stop Huixin, so he had to help her open a margin trading credit account and cash out the three stocks she originally held.

After working hard for a while, Huixin soon had 3 million US dollars in her credit account.

At this time, it had been some time since the market opened, and Benjamin called Kardashian and others to help her sort out the rise and fall of today's various mid-, high- and low-price stocks.

Although they know that this woman will most likely not use any data analysis to choose which stocks to short, the customer is God, not to mention such a God who holds a large amount of funds in his hands. They can only allocate an extra ten A team of people was formed to summarize and sort out the data for Huixin.

Huixin really didn't intend to look at that thing. She couldn't understand it anyway. As for what to buy and how much to buy, the second young master made it clear to her last night.

But at this moment, seeing Benjamin and a group of white men and women surrounding her gave her a sense of accomplishment.

Today's stock market is skyrocketing as usual, as if what Hoover said a few days ago has no effect at all.

Two hours before the market closed, Benjamin and others finally sorted out the mountains of data and immediately moved them all to the VIP room for Huixin to check.

Huixin flipped through the information casually, pretending to read the content, but in fact she was just checking the discrepancy between the data and what the second young master said. After all, the second young master could not guarantee that he could cover everything.

There are a total of 17 stocks to buy today, including six high-priced stocks, three mid-priced stocks and eight low-priced stocks.

These six high-priced stocks include famous industrial companies such as United States Steel Company, American Radio Company, and Montgomery Ward Company.

Huixin made a "careful selection" and informed Benjamin of her choice, asking him to immediately inquire about the corresponding brokerage resources to see if he could borrow stocks from these companies.

It is easy to buy a few high-priced stocks. Behemoths like U.S. Steel have their own securities companies. If you want to borrow a large amount of their securities, you only need to ask these securities companies for loans.

Benjamin glanced around and said, "Hey guys, these are all high-quality stocks with extremely obvious upward momentum today."

What’s wrong with shorting is that you have to short these stocks.

However, he has figured out Huixin's character. Once this woman decides on something, no one can make her look back.

I can only pray that all 3 million US dollars will not be wasted.

Everyone in the trading department immediately took action and asked various channels whether there were a large number of shares in these seventeen stocks that could be borrowed.

Six high-priced stocks responded quickly.

Benjamin just made a call to their securities company and heard that there was a "fat sheep" who wanted to short their own stocks at this time. The group of people were so happy that they casually decided on a ten-fold leverage.

As for other mid-price stocks and low-price stocks, because they do not have securities companies themselves, it is too late to collect stocks from retail investors in the market at this time, so they have to go to the major shareholders who hold shares in those companies and ask them to temporarily borrow their stocks. To Huixin.

The interest rate of this kind of lending method will be much higher than that of securities companies, but at the same time, these major shareholders will also bear corresponding risks.

There were examples in later generations.

Some overseas capital suddenly borrowed heavily from the stocks of some small and medium-sized enterprises, saying that they wanted to short-sell.

Faced with the red bull market and the high interest rates, major shareholders simply could not resist the temptation, so they took action one after another and lent their shares to each other.

Unexpectedly, the other party acquired a large number of shares of the company in one fell swoop, and then vetoed an important resolution proposed by the company during the board meeting with one vote!

The company was severely damaged.

Since then, major shareholders must report their equity changes by more than 5% to the regulatory authorities and explain the reasons to prevent malicious short selling and a huge negative impact on listed companies.

Of course, this is 1929, no one has ever tried these tricks, and supervision is unprecedentedly weak.

If Huixin can acquire the stocks of these top companies in large quantities and then play such a trick, it may cause damage to the American industry.

However, this is generally something that competitors or hostile countries would do. It is a thankless practice that harms others but does not benefit oneself. Huixin does not need to do this.

The trading department of the New York Stock Exchange, with its contacts and power accumulated over the years, played a huge role at this time. One hour before the market closed, it helped Huixin secure all stock loans with 10 times leverage.

Regarding these operations, the second young master also explained them to her last night, so that she would not completely understand them.

This form of short selling actually means predicting that the stock price will fall, borrowing a batch of stocks from brokers and other platforms in advance, and then selling them. Later, you can buy back the stocks within any range within the agreed time, and return these stocks The borrower has completed a short sale.

Leverage means that you can leverage more stocks with less capital.

Take, for example, the U.S. Steel stock she bought.

The price of U.S. Steel when she bought and sold it was $85.6 per share. She borrowed a total of 100,000 shares and was supposed to pay $8.56 million, but because the leverage was 10 times, she only had to pay the securities company $85.6 A deposit of US$10,000 is enough.

Generally speaking, the term of this kind of loan contract is one year, as long as Huixin returns the stocks on time within one year.

Of course, as long as she doesn't repay it for a day, high interest will accrue every day. This interest rate is much higher than that of a bank loan.

The interest rate of U.S. Steel's securities company is one cent, which is $1,000 per month on $100,000.

The more popular interest rate of 50,000 yuan per day (interest rate of 5 yuan per day on 10,000 yuan), which is more popular in later generations, is commonly known as one-and-a-half cent interest.

The average housing loan can be as low as about 5%.

Of course, short selling and using leverage are also extremely risky.

According to market regulations, when the stock rises by more than 5%, Huixin's position is liquidated by default.

In other words, if U.S. Steel's stock price of US$85.6 only increased by US$4.28, her position would be liquidated, resulting in a direct loss of 8.56 million.

Is it irritating?

Why is Benjamin so unfavorable about shorting this.

Because U.S. Steel's stock had been rising at a rate of US$0.5 a day before, it might not take ten days for Huixin to liquidate her position.

If she retreated early, she would lose hundreds of thousands of dollars.

The same goes for other stocks.

Huixin’s $3 million instantly mobilized $30 million in funds.

Her heart was pounding. If any stock was liquidated, it would be a loss of millions of dollars!

Only the second young master dared to play like this. (End of chapter)