America's Road to Wealth

Chapter 237 Beware of Art Failed Students

Buy one in Manhattan, or build an office building of your own.

Abel had already thought about this matter.

It's just that later his attention in this area was drawn by Hudson's Bay City Plaza.

However, there are too many aspects involved in the Hudson Bay City Square.

It is impossible to get on the horse in a short time.

In other words, the super headquarters building that Abel wants to build will not appear in the short term.

Every time Abel came to Smith Capital after the expansion, he felt that the company was a bit crowded.

After much deliberation, he thought before getting on the horse in Hudson's Bay Town Square.

You must first find a spacious enough office space for your company.

The best way, of course, is to buy a tall and big building in Manhattan or New York.

In this way, not only can Smith Capital be placed in it.

It is also possible to place the headquarters of companies such as Elizabeth's Back Garden, ab Smith Entertainment, ab Smith Newspaper, amc TV station, aircraft and yacht charter, etc., whose headquarters are also in New York.

Having said that, the number of companies under Abel's name in New York is really quite a bit.

In addition, those companies in Los Angeles and other places also need to add branches in New York.

If this part is added, there are only a dozen companies under Abel's own name in New York.

A Smith building can barely fit a Smith Capital.

Not to mention other companies.

Abel no longer intends to wait for the Hudson Bay City Square.

He has no interest in rebuilding a new building.

Finally think about it.

Abel felt that directly buying a ready-made skyscraper would be the best solution at present.

Anyway, as long as you don't buy Gemini, or other buildings next to Gemini, it's fine.

Until that day, other places should be safe.

When people go to hit Gemini, they don't do it blindly.

Who said that before that, the twin brothers were the tallest and second tallest buildings in the United States respectively.

This kind of landmark building is in lower Manhattan, and it is a bit unreasonable not to hit them.

"...to buy a building."

Barista David Mellon sets down coffee in Abel's office break area.

"It is indeed necessary." David Mellon looked at it from the perspective of Smith Capital.

In David's view, Smith Capital, which has less than 600 employees, still needs to continue to expand.

Not to mention being like Goldman Sachs, there are more than 2 vice presidents, and the peak number of the company once exceeded 3.

At least it must be like Wall Street giants such as Merrill Lynch and Lehman Brothers, with 6000 employees.

With 6000 employees, the Smith Building, which was originally enough, could no longer hold it.

Even if it is more crowded, the Smith Building can only accommodate about a thousand people to work at most.

This is still in the case that it may affect the efficiency of work.

If you want to make Smith Capital, there will be an office location that can be expanded in the future.

In Manhattan or New York, owning your own mansion is already a rigid requirement.

Abel put down the "Manhattan Property List" that Papa Ikana gave him.

"I want to buy the Woolworth Building," he told David Mellon.

The Woolworth Building was the former headquarters of Smith Capital.

This is a building with a long history. It has been the tallest building in the world for 16 years.

Built by Woolworth, the former American retail tycoon.

More importantly, Abel now holds about 20% of the equity in this building.

This part of the shares cost Abel almost 3 million US dollars at that time.

Moreover, most of the shares in this building are in the hands of those Wall Street investment bank giants.

The proportion of shares is 12% owned by Merrill Lynch,
28% is owned by Goldman Sachs,
30% owned by Wells Fargo,
About 10% is owned by minority shareholders.

The remaining 20% ​​is in the hands of Abel himself.

Compared with other buildings, it is not too difficult to put the Woolworth Building under the bag.

For those investment banks, based on Abel's current relationship with them, basically they only need to give money.

The 10% or so of minority shareholders’ shares must be sold if not sold under the general trend.

Just since last year, real estate across the United States has been rising crazily.

Last year, the Woolworth Building was worth about $15 billion.

This year there is no around US$16 billion, and it is estimated that there is no way to win it.

"The Woolworth Building?" David Mellon thought for a while and said:

"Although it is a bit old, the area is indeed sufficient. And it also has enough history and landmarks."

The Woolworth Building is 57 stories tall.

Originally built by Frank W. Woolworth, it was only intended to be 42 stories high.

Later, he discovered that if it was a little taller, it could become the world's largest building.

In order to be number one in the world, he temporarily asked the designer to increase his height.

The original 42-story building has become 57 floors.

Frank W. Woolworth was also famous for saving and calculating.

The extra 15 floors, they are much smaller than the original 42 floors.

They are based on the 42nd floor, and extend about one-third of the area.

This makes the Woolworth Building look very beautiful from the front after it is completed, and it is a standard neo-Gothic tower.

But from the back and side, it looks like an iron.

The front is a lot higher, and the back is completely flat.The front is like the handle of an iron, and the back is a flat iron.

"Then make sure it's Woolworth." Abel said bluntly:
"I'll ask Alan Baker to contact these shareholders later and try to move in before October."

It doesn't mean that if you buy the Woolworth Building, you can live in it directly.

As one of the well-known buildings in Manhattan, Woolworth is located at the core of Barclay Street and Broadway Street.

There are many companies leasing on this, and many of them are well-known enterprises.

The leases of these companies are at least several years, and some may be more than ten years.

If you want to rent out these companies, you need a certain amount of breach of contract costs and a certain amount of time.

In addition, it will take a certain amount of time to move the companies under Abel's name, including Smith Capital, to the Woolworth Building.

The interior of the building may also undergo certain modifications and renovations.

Adding up these times, it is estimated that it will take about half a year.

After half a year has passed, New York is also safe.

After that happened, move all the companies here.

In this way, in the panic-stricken America and Manhattan at that time.

You can also mix in an achievement like "Strong Manhattan supporter".

After all, after that, many multinational giants and financial companies were really frightened and wanted to leave Manhattan.

That is to say, the US and New York authorities have made great efforts to ensure that this kind of thing will not happen again.

Only then did Manhattan not become a ghost town overnight because of panic.

Then again, Abel remembers it as if after that incident.

Housing prices in Manhattan, and even the entire New York City area, have fallen for several months in a row.

It was not until the second year that Americans saw the determination of the White House that they re-established their confidence in Manhattan and the New York City area.

Thinking of this, Abel felt that it would be time to let the new starting point real estate, and after that incident, Manhattan will sweep the property.

Abel intends to purchase the Woolworth Building outright in his own name.

In this way, although a certain amount of land tax has to be paid every year, it can spend 16 billion US dollars at one time.

Such a large amount of profit will be turned into investment.When it comes time to do the new tax return, it will be a little easier.

While drinking their favorite coffee, the two chatted about Smith Capital.

Smith Capital without Abel launching a big move.

Its appeal to investors in the market is actually not very strong.

Because the investors originally came to Smith Capital because Abel could provide them with high profits.

Without this relationship, Smith Capital does not have much advantage over other Wall Street giants.

On the contrary, because of factors such as brand, channel, and transaction point, it is a huge disadvantage.

Not all of the more than 2 vice presidents of Goldman Sachs stay in New York.

Most of them are scattered all over the United States and even the world.

Simply put, these established giants have a large number of branches.

These branches have absorbed a huge number of customers.

This is not the case with Smith Capital.

It is currently able to attract, only investors near New York.

There were also some great rich men who came in the name of Abel.

This also makes Smith Capital, except for the few private equity where Abel is the fund manager.

Other financial products and investment products are seriously insufficient in attracting customers.

There is nothing David Mellon can do about this situation.

It can only be done step by step, after gaining a firm foothold in New York.

In the follow-up, in other cities, business points and branches will be added one after another.

After thinking about it, Abel made a suggestion:
"Perhaps we could add a money fund?"

"Monetary Fund?" David Mellon said:

"Forehead, among our financial products, there is already a monetary fund."

When it comes to monetary funds, the rabbits in China probably think of "Ye Bao" first.

But in fact, the money fund is not the first of the old horse.

It has been around since the 70s and 80s.

Early 70s to 80s.

The United States is in a "stagflation" environment with economic recession and high inflation.

At that time, the Soviet Union was strong and the United States was weak, and the Soviet Union attacked and the United States defended.

The strong and strong red bear scared the European and American world into shivering.

At that time in the United States, even capitalist newspapers such as the "Wall Street Journal" were "fixing, discussing, and asking" and "please wait for your people in the United States." They all suspected that the line was wrong.

Due to economic problems, the Federal Reserve at that time regulated bank deposit interest rates.

This makes the deposit interest rate of residents even lower than the inflation rate, and deposits have been in a state of depreciation.

At that time, the inflation in the United States was as high as 20% at the time.
At that time, in order to attract funds, banks launched large-amount time deposit certificates with interest rates higher than the inflation rate.

However, the starting amount of this kind of time deposit certificate is relatively large, and the minimum investment unit is often [-] or [-] million US dollars.

At that time, only a few institutional investors, or wealthy people, had enough cash to make such investments.

For most Americans, the only financial investments available at that time were bank savings accounts, stocks, and bonds with pitifully low interest rates.

When times are tough, people naturally look for safe, liquid assets.

However, many financial assets are either too risky, illiquid, or have too low returns, in short, they cannot meet the financial needs of investors.

At that time, Ruth Bant was director of cash management and credit analyst at Teachers' Pension Insurance Company, the world's largest pension fund.

He came up with a brilliant idea after doing thorough research on the financial services industry.

In 1970, he founded a mutual fund named "Thus Savings Fund Company", which was authorized by the Securities and Exchange Commission in 1971 to sell financial products to the public.

In October 1972, Savings Fund Corporation, purchased $10 in high-interest term savings.

At the same time, it is sold to small investors with an investment unit of 1000 US dollars.

In this way, small investors enjoyed the return on investment that can only be obtained by large companies, and at the same time had higher cash liquidity, and the first money market mutual fund in history was born.

Since then, similar money funds have emerged one after another, and they are nothing new in 2001.

Even Smith Capital itself, the many financial products developed by David Mellon and company executives, also has a currency fund.

Fortunately, David has adapted to his boss.

David knew that Abel was like a god in a high-stakes transaction.

But Abel's knowledge in the general financial field is really mediocre, maybe even worse than that of many financial students in universities.
Therefore, David didn't feel bad about Abel's proposal.

"No no no no."

Abel shook his head, "The monetary fund I am referring to is different from traditional monetary funds."

After thinking about it, Abel added: "To be precise, the currency fund I'm talking about should be called "Virtual Currency Fund."

"Virtual currency fund?" David Mellon was a little puzzled.

A monetary fund is a monetary fund, can it be virtual?

David didn't know that there would be something called virtual currency in the future.

Cut all the leeks in the world to death.

"Retail investors, household micro-investors and other micro-investors, what channels do they usually invest in stocks and funds?" Abel asked.

"Go to a bank or a local securities company to open an account. Then go through their securities manager to implement their investment requirements." David Mellon said.

This is also the way investors all over the United States or around the world have bought stocks and funds for almost 200 years.

"Then how do they contact their investment managers?" Abel asked persuasively.

David Mellon thought about it:
"It's usually a phone call. In the past, there were faxes and telegrams. Or go directly to a securities company to find an investment manager. But now there is an Internet, and some securities companies have tried to contact customers on the Internet."

"That's right." Abel put down his coffee and tapped on the table, "This is it, the Internet!"

"The virtual currency fund I am referring to is a new currency fund transaction method that requires the use of the Internet."

Abel said:

"As far as I know, as early as 1995, online trading of stocks began to appear on the New York Stock Exchange. But the large-scale popularization did not take place until 1998, that is, three years ago."

"The real Internet account opening has not yet appeared. To open an account, customers also need to go to a securities company or a bank. Then the securities company or bank provides a port to conduct transactions on the Internet."

"But strictly speaking, so far. This kind of transaction is actually notifying the investment manager by phone, but it has changed to using the Internet to notify the investment manager."

"Then I think that Smith Capital can completely move all financial products that allow small investments, such as currency funds, to the Internet. In the future, even account opening and transactions can be directly carried out on the Internet."

"What Smith Capital has to do is to maintain our network. In those big cities with nodes, add some branches."

"In this way, we don't need to open a large number of business outlets like Goldman Sachs. We can find a way to make our customers come from the Internet as much as possible."

Abel didn't know exactly what to do.

But before he was reborn, he bought things like Yu'e Bao and Yu Li Bao.

I have also bought stock funds on some brokerage software.

Abel told David Mellon the main points of Internet brokerages such as Yu'e Bao, choosing what he could explain clearly.

Gradually, David Mellon understood what Abel meant.

"Oh boss, what do you mean, to directly sell microfinance products such as monetary funds on the Internet?"

David Mellon said: "Open them an account directly on the Internet? Direct transactions on the Internet?"

Abel nodded, "That's probably what it means. But the specific operation and feasibility, etc., you need to measure it yourself to see if you can do it."

To put it bluntly, what Abel said is the prototype of an Internet brokerage.

In fact, at this time, some people on Wall Street are already exploring this model.

Abel also met the founder of the company that was groping for this model.

It was Thomas Peterffy's Interactive Brokers that Robert introduced to Abel at the last reception at Morgenthau's house.

Interactive Brokers started off as trading tools, and even the computers and systems in the New York Stock Exchange were configured by Interactive Brokers.

Interactive Brokers is a pioneer in the computerization and Internetization of the US financial market.

Even the online stock trading realized in 1995 was the first to be started by Interactive Brokers.

It's just that the limitations of the times are there, even Interactive Brokers, which has a different vision.

At this time, the complete Internet brokerage has not yet begun, and Thomas Peterffy is still groping.

Abel, who came from 2022, is much more direct.

Thomas Peterffy of Interactive Brokers is still exploring Internet brokerage 1.0.

That is, the basic version built on the computer Internet.

The approach proposed by Abel is already the 2.0 of Internet brokerages.

That is to say, it is a complete version based on the mobile Internet and smart phones.

With the current technical conditions and Internet conditions, version 2.0 is of course impossible to realize.

However, many trading concepts of version 2.0 are optimized on the basis of version 1.0 of Internet brokerages.

Just change those characteristics that are not suitable for the current Internet and only suitable for the mobile Internet.

The set of things proposed by Abel is completely feasible during this time period.

You must know that the population of the United States was only 2.85 million at this time.

But the number of Internet users is already 1.1 million (another data is 9000 million).

Assume that among the nearly 100 million Internet users, [-] million are willing to invest.

Of the 100 million people who are willing to invest, [-] have chosen Smith Capital.

That is also a huge customer base for Smith Capital.

David Mellon, who was already very smart and a genius on Wall Street, knew everything about it.

After listening to the boss's thoughts, David Mellon became more excited as he thought about it.

"Boss." David couldn't help looking at Abel: "Fortunately, you studied art in college. If you studied finance or business in college, I think I will lose my job."

Abel understood what David meant, and he was beating around the bush.

Fortunately, Abel also knew that it was not how smart he was.

It's just that I said something that I had accumulated for more than ten or twenty years, and said it more than ten years in advance.

This is standing on the shoulders of the giants of the times, not how smart you are.

So he just smiled reservedly at David and said:
"Well, who told me that what I'm more interested in is actually art? If I failed the exam at that time, I might have studied finance or something."

David Mellon complained:

"Then it's a good thing you didn't fail the exam, boss. The students who failed the exam at the Austrian Academy of Fine Arts started a world war."

"If you fail, boss. Maybe it's Rice University's failure in fine arts, which caused a world war on Wall Street."

(End of this chapter)