Investor That Can See The Future

Chapter 17

Things turned out differently than we expected.

Within two days, the stock price of Suseong Electronics did not fall, but rather rose 8 percent. The reasons were complex.

The atmosphere in the global stock market was good, the exchange rate was favorable, and DRAM prices rose.

The short selling yield was -8%, as it was inversely proportional to the share price rise.

The problem was put options.

As the stock price of Suseong Electronics and the KOSPI rose, the possibility of exercising the put option further decreased. As a result, the value of the option has plummeted.

Billions of dollars have already flown.

When I saw the account all marked in blue, I was almost in a cold sweat. Taek-gyu didn’t say anything, but he looked confused.

Even while the stock price was rising, L6 continued to explode, and more than 10 cases have been confirmed so far. Seoseong Electronics said that it would announce its position on the ignition incident tomorrow.

Rumor has it that the direction has been toward battery replacement.

Complaints erupted on the Internet.

– To replace the battery, you would have to remove the back plate.

-Then the waterproof function doesn’t go down? If the water leaks, will you guys take responsibility?

– Does it make sense to disassemble as soon as you buy a phone that costs over 1 million won?

– As soon as it was released, I paid my full price and bought it, and it was perfect.

– What kind of beta tester is consumption?

-I will just refund the L6 and will never use Seosung Electronics again in the future.

Taehyung asked me.

“Will it be discontinued when it is announced tomorrow?”

I nodded.

“I will.”

If what Yeji showed was true, it would certainly be.

* * *

A press conference was held at Seoseong Electronics’ Gangnam office in relation to the L6 ignition incident.

Seosung Electronics is one of the world’s top global IT manufacturers. As such, the press conference hall was filled with domestic and foreign journalists as well.

Dong-Jun Cho, president of the IM division, personally appeared at the press conference.

He stood in front of the microphone with a heavy expression and opened his mouth.

“We deeply appreciate the unwavering support of our customers who cherish and love Seosung Electronics products. Some of the L6 products launched by Suseong Electronics have reported battery burnout. We are very sorry for the inconvenience and concern this has caused.”

The reporters wrote the story of President Cho Dong-jun directly as an article and sent it out like a stenographer.

President Cho Dong-jun continued his presentation while looking around dozens of cameras and hundreds of reporters.

“After analyzing the cause internally, it was confirmed that the battery cell itself was an issue. It is expected that the product with the battery in question will be one in hundreds of thousands, but considering consumer safety as the top priority, we have decided to temporarily suspend sales and replace all L6 units sold to date with new ones. Product preparation is expected to take a week. We plan to exchange it for a new one as soon as possible, and we will check and take action for customers who visit the service center even before the product is ready.”

The unexpected announcement surprised the reporters who were writing the article.

Journalists raised their hands and asked questions.

“Are you going to recall the product itself rather than replacing the battery?”

“That’s right.”

“What was wrong with the battery cell?”

“There was a slight error in the manufacturing process of the battery cells delivered from Seoseong SB. The separation membrane was damaged due to the pressing of the upper right part, and the cathode and anode met, and it is confirmed that burnout occurred in this area.”

“What is the difference between a new product and an existing product?”

There were a lot of questions, but President Cho Dong-jun calmly answered them one by one.

“Due to the problem of volume procurement, Seoseong SB batteries were installed in the first countries, and BTL batteries were planned for the second countries. We will postpone the release schedule of the second release country and put all currently in production into the recall. After a week, I think the recall will be done sequentially.”

“The recall is due to the manufacturer’s responsibility. What will you do about consumer inconvenience?”

“That part is currently being discussed with the mobile operators. We will do our best to ensure that sufficient compensation is achieved.”

“How much do you expect to lose due to the recall?”

President Cho Dong-jun said with a worried expression on his face.

“It’s a staggering amount to say. However, we have made this decision because we believe that the safety of consumers is our top priority.”

* * *

Taek-gyu was watching the news and dropped the chicken he was eating.

“Not discontinued, but recalled? How is it going?”

I was shocked as well.

I was at a loss for words.

“·················ogue.”

If that’s the case, I’m completely out.

-Are you replacing the whole battery with a new one instead of just replacing the battery?

– Do you replace it without asking or questioning?

– Even if the LCD is damaged, you can change it if you bring the body.

– Until then, I’ll just use it and change it.

-Seoseong Electronics is a complete person-to-person meeting.

– It’s different from NPL’s AS policy.

– The phone doesn’t even explode in the first place, what are you talking about?

Articles posted on the Internet generally welcomed Suseong Electronics’ decision to recall.

According to a survey conducted by a polling institute, 95% of L6 users said that they trust Suseong Electronics and will continue to use L6. About 6 million units have been sold to date.

If all of these products are replaced with new ones, a nominal loss of 6 trillion won will occur. However, this is based on the sales amount, and the manufacturing cost is estimated to be around 300,000 won.

As a result, the actual loss would be only about 2 trillion won.

If the recovered phone is sold as a refurbished phone to an emerging country, it is predicted that the loss may not be very large.

Although a trillion-dollar loss occurred, the market evaluated that it was not a level of concern because it was a one-time loss.

On the contrary, there were reports that Suseong Electronics would gain the trust of consumers through this incident and that it would be beneficial to the company in the long term.

Shares, which had fallen on the announcement of the recall, rebounded at the end of the session and fell only 1.5 percent.

next day.

Seosung Electronics announced a shareholder return policy, including quarterly dividends. Markets cheered the stronger-than-expected announcement, and the stock rose 3.4 percent.

* * *

The blue light was on all over the account.

Short selling losses were over -10%. This was a loss that could be tolerated. But with put options, it was a different story.

The loss on the put option was over -30%. Some even recorded -80 percent.

When combined with short selling, the loss was already close to half of the investment.

Taek-gyu looked at his account balance and had a half-conscious expression on his face.

A few days ago, when I bought put options, I never imagined that this would happen.

I checked my balance with my eyes wide open.

Of the 13 billion won invested in the purchase, 6 billion won evaporated. Hundreds of millions of my money have already flown away, and several billions of Taek-gyu’s money have already flown away.

It was agreed to share the profits, but most of the losses were to be borne by Taek-gyu. It’s not like I can ask you for a few billions.

“·················ogue.”

What should I do now?

* * *

I closed my eyes and lay down, but I couldn’t sleep.

There was only one thought in my mind.(Read more @ wuxiax.com)

Why is it a recall rather than discontinuance? What am I doing wrong?

Maybe I missed something?

What should I do now…?

The number six billion flashed in front of my eyes.

“Six billion…”

I have no idea what the amount is.

That’s enough money to eat and play without working for the rest of my life. If I spend 100 million a year from now, will I be able to use it all?

But the money was blown away in just a few days.

Money that has never been touched is simply recorded as a negative in the account.

Warren Bott, known as an investment genius, said that you only need to follow two principles when investing.

First, don’t lose your principal.

Second, be sure to follow the first principle.

He adhered to those two principles, but other investors did not. So he had great success, but other investors failed.

······· is nonsense.

What madman wants to lose his principal? He knows how to make money, invests it, and then blows it away.

Regardless of whether it is possible or impossible, that statement itself makes sense.

If you lose 50% of your principal, you have to pay 100% of your money to recover it. Therefore, once the principal is lost, it is almost impossible to recover.

But we ate 6 billion won from the start.

The bigger problem is that this is not the end.

The value of an option decreases over time. Options that can be exercised have the same expected return and option price, but options that cannot be exercised converge to 0 won no matter how much they are bought.

At this rate, after the expiration of the option, billions of additional losses will be incurred.

What should I do?

Should I withdraw now to avoid further losses?

If it ended like this, it was virtually impossible to recover the principal.

I felt as if fear was choking my throat.