America's Road to Fame

Chapter 41 Nelson's Choice
It can be said that anything on Wall Street can be hedged by issuing bonds.The CDO and CDS mentioned by John Paulson are two kinds of bonds related to subprime loans.

Of course, it will be very troublesome to explain the specific principles of these two bonds. It can be simply understood as: subprime loans are the loan grades with the lowest credit of the borrower, so the risks are high and the interest rates are also high. CDOs are issued with high-interest subprime loans as collateral. As long as the real estate market continues to prosper and housing prices continue to rise, CDOs will get relatively high returns because subprime loans rarely default.

CDS is a default swap bond for hedging CDO risks. It is almost an agreement that borrowers will be compensated if they default. It is equivalent to CDS insurance. The values ​​​​of CDO and CDS are opposite. The sharp drop in CDO prices means that the risk of default by subprime lenders has increased, and the corresponding CDS will increase in value because of the increased possibility of being compensated.

Therefore, in the current real estate boom and rising housing prices, the price of CDOs is getting higher and higher, while CDS is completely the price of cabbage; once the subprime mortgage crisis occurs, the price trends of these two bonds will be completely reversed.

John Paulson's strategy is very simple, short CDO, buy CDS.It's just that he will use a set of complex strategies to continue this process. Once the subprime mortgage crisis breaks out, the investments he has made will usher in rich harvests.

According to John Paulson's prediction, once the subprime mortgage crisis breaks out, as the crisis deepens, his strategy will be able to get at least 10 times the return. Of course, the specific amount of profit depends on the severity of the crisis. If The crisis will spread deeper, so it is very possible to earn more than 30 times, 50 times or even a hundred times.

William Chen was very satisfied with John Paulson's answer.At the end of the conversation between the two, William Chen decided to spend 5 million U.S. dollars to set up No. 1 Fund in Meta Investment Company. This fund is the company's self-operated fund, with John Paulson as the fund manager. According to the strategy, from now on, open a position to short CDO and buy CDS.

In order to motivate John Paulson, Chen William promised that he could finally get 5.00% of the profit of this fund as his personal commission share.And if this fund can perform well, William Chen will also establish a private equity fund open to the public for him.

William Chen’s conditions made John Paulson very satisfied. After all, the fund he controlled before was less than 2 million US dollars. Now William Chen directly took out 5 million US dollars to establish a company for him. Fund, and the opportunity to manage another large-scale private equity fund, these are John Paulson's dreams after being coldly received by Wall Street in the past two years.

What he hopes most now is to have the opportunity to use his investment achievements to tell everyone that his prediction about the real estate bubble is correct.Now that William Chen gave him such an opportunity, he was naturally grateful.

……

Chen Weilian was in a good mood today, even in class in the afternoon, he was always smiling.It's just that Erica didn't seem to be like this. She acted as if what happened last night had never happened, and she still had the same attitude as yesterday. She didn't look at Chen William, her expression was also cold, and she just treated him step by step. Speaking of the topic, William Chen almost suspected that everything that happened last night was a dream.

Sometimes it is really hard to guess a woman's mind, especially now, what should have happened to the two of them has already happened, Chen Weilian is a little confused why she deliberately made such a gesture.

"Erica, I think we should have a frank talk." When the meal was over, William Chen looked at Erica across from him and said.

"Oh? About what?" Erica asked lightly.

"For example, what happened last night."

"What happened last night... I forgot." Erica took a sip of the thick soup and frowned slightly. She glanced at William Chen and turned her gaze out of the window: "Since you said so, William, I hope you Knowing that we are now a teacher-student relationship, and other things that have nothing to do with this, I hope you can forget."

"It's really just like that?" William Chen raised his eyebrows, and at this moment Erica had to admit that the man in front of her always made people's heart beat a little faster.

"Yeah, that's all. At least for now."

The words behind her were very light, almost talking to herself, but they were still captured by William Chen. He took a deep look at Erica and said with a smile: "It won't always be like this."

……

Nelson and Alicia returned to New York to finish the follow-up to the Twitter acquisition.Now, after paying 1.7 million to acquire 85% of the shares of Twitter, William Chen has completed the absolute holding of the company and served as the chairman of the company.

Twitter will still stay in Silicon Valley, after all, the environment there is more conducive to the company's development.Williams still serves as the CEO of Twitter, and Chen William will only send his own people to supervise the company's daily operations and financial status.I will also provide my own opinions on the direction of operation according to the experience of my previous life, but in the main company operation, I will respect the opinions of the management team.

If you come to a world that is not the same as your previous life, and you find that even the leader of the United States has become a person you have never heard of, then how likely are you to invest according to the memory of your previous life?

It's like Chen William didn't sell Building 666 at the beginning, and then use the money to invest in those companies that he knew in his previous life that he would become giants in the future, because for the reborn, change is Worst of all, the unknown brings fear.

Most of the reborn people will only rely on the memory of their previous life to achieve financial freedom at first. When you find that so many things have gone off track, how can you confidently think that those companies that were successful in the previous life can still be successful now?

Everything can change. It may not be Apple but Tangerine that leads the development of smartphones; it may not be Tesla but Godzilla that initiates the electric vehicle revolution.

However, the development of social science and technology will not change much. The popularization of smart phones will inevitably bring about the rise of the mobile Internet; and the popularization of the mobile Internet will definitely make online shopping, live broadcasting, and video-on-demand industries advance by leaps and bounds.Even if you can't find the leader of the previous life 100%, you can still make a lot of money by investing in these tracks.

William Chen also had such a plan at first, wanting to hang on first, so that he can save a certain amount of capital and wait for the arrival of those outlets.But now it is different, he has the Future Bank, and with the success of his investment, he has more than 20 billion US dollars in funds.

So now, he has the confidence to make a bet, so he dared to acquire Twitter and other companies that he was familiar with in his previous life.Because even if the world changes and those companies are not as successful as in his previous life, he will still not be hurt, and he still has the capital to bet again.

So after Nelson returned to New York, William Chan asked him to meet.Nelson is a smart person. At first, when he received a call from William Chen and asked him to meet, he subconsciously thought that the other party had another business to hand over to him, but immediately rejected this possibility.

Because when Chen Weilian entrusted himself with something before, he mostly said it directly on the phone, but this time he didn't say anything, he just wanted to meet and talk with him. guess.

Sure enough, after the meeting, Nelson's guess was confirmed.William Chen offered him an option—leave from the current Deloitte Consulting Company and work for William Chen.

William Chen plans to divide Meta Investment Company into two departments: securities investment and equity investment. Candidate, William Chen chose Nelson.

After several cooperations, William Chen appreciated Nelson's ability.And he is consulting at Deloitte at this time, not an important management, and he is relatively young, so it can be said that he is very malleable.

He will have many acquisition and investment plans in the future, and he needs a suitable candidate to replace him to execute them. Many of those well-known investment talents are over 40 years old. With William Chen's previous reputation and his age, he wants to It is not so easy to convince those people of their own judgment.And Nelson is the most suitable candidate for him at this time, regardless of age or ability.

In fact, after hearing William Chen's invitation, Nelson was indeed a little moved.He is also aware of his situation. Although he has confidence in his ability, he is just a small supervisor in Deloitte Consulting.And as a top consulting firm within the top 3 in the world, Deloitte's competitive pressure is also very large.

Don't think that American companies are just so meritocracy. Big business diseases are widespread. Therefore, in this kind of big companies, luck is also very important in addition to ability to be promoted to the top. Nelson dare not do that Be confident that you can really sit in those positions.

But now in front of him, there is such an opportunity that allows him to have more opportunities to display his talents.William Chen proposed that if he accepts this position, he will not only get a basic salary of one million dollars a year, but also more than one billion US dollars for him to invest.Of course, most of these funds were to be invested under William Chen's instructions, but he still had the freedom to choose the amount of investment.

Perhaps regarding Chen William, there are still many people who have some negative views on him because of his previous reputation.But Nelson has worked with William Chen several times, and through these contacts, he can see a completely different image from the reports and legends, and his views on him will not be affected by those news.

He was originally a decisive and adventurous character, so after a little consideration, he accepted William Chen's invitation, saying that he would submit a resignation application to Deloitte Consulting as soon as possible, and after handling the handover there, he would join the job as soon as possible and become Meta The manager of the equity investment department of the investment company.

(End of this chapter)