Chapter 41： Nelson's Choice
It can be said that anything on Wall Street can be used for risk hedging by issuing bonds. The CDO and CDS mentioned by John Paulson are two bonds related to subprime loans.
Of course, the specific principles of these two types of bonds are very troublesome to explain. It can be simply understood as: subprime loans are the loan grades with the lowest credit for borrowers, so the risks are high and the interest is 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 earn relatively high returns because subprime loans rarely default.
CDS is a default swap bond to hedge the risk of CDO. It is almost the agreement that the borrower will be compensated for default. It is equivalent to the insurance of CDS. The values of CDO and CDS are opposite. The sharp drop in the price of CDO means that the risk of default by subprime lenders increases, and the value of the corresponding CDS will increase due to the increased possibility of being compensated.
Therefore, when the current real estate boom and housing prices continue to rise, the price of CDOs is getting higher and higher, while the price of 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, that is, short CDOs and buy CDSs. It's just that he will use a complex set of strategies to continue this process. Once the subprime mortgage crisis breaks out, then these investments he has made will usher in rich harvests.
According to John Paulson's prediction, once the subprime mortgage crisis broke out, as the crisis deepened, this strategy he made could be reported at least 10 times. Of course, the specific profit depends on the severity of the crisis. The crisis will spread deeper, so more than 30 times, 50 times, or even 100 times the return is very likely.
William Chen was still very satisfied with John Paulson's answer. At the end of the conversation between the two, William Chen decided to set up the No. 1 Fund in Meta Investment Company with 500 million US dollars. This fund is the company's self-operated fund, with John Paulson as the fund manager. These funds are used to implement the funds he made. strategy, from now on, open a position to short CDO and buy CDS.
In order to motivate John Paulson, William Chen promised that he could eventually get 5% of the profit of the fund as his personal commission. And if this fund can perform well, William Chen will also establish a private equity fund for him that is open to the public.
These conditions of William Chen made John Paulson very satisfied. After all, the fund he controlled before was less than 200 million US dollars, and now William Chen directly took out 500 million US dollars to build a company for him. Funds, and the opportunity to run another sizable private equity fund, these are all things John Paulson has dreamed of after two years of cold reception on Wall Street.
What he hopes most now is to have the opportunity to use his investment performance 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.
……
Today, William Chen was in a good mood, and he was always smiling when he took the class in the afternoon. It's just that Erica doesn't seem to be like this. She behaves as if what happened last night had never happened. She still has the same attitude as yesterday. Talking about the topic, this made William Chen almost suspect that everything that happened last night was a dream.
Sometimes it's really hard to guess what a woman is thinking, especially now that what should have happened to both of them has already happened. William Chen doesn't understand why she deliberately made such a gesture.
"Erica, I think we should talk frankly." When the meal was over, William Chen looked at Erica opposite and said.
"Oh? About what?" Erica asked lightly.
"For example, what happened last night."
"I forgot what happened last night." Erica took a sip of the thick soup and frowned slightly. She glanced at William Chen and turned her eyes to the window: "Since you said that, William, I hope you Knowing that we are now a relationship between teachers and students, and other things that have nothing to do with this, I hope you can forget about it."
"It's really just like this?" 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 faster.
"Yes, that's all. At least for now."
The words behind her were very light, almost speaking to herself, but she was still captured by Chen William. He gave Erika a deep look and said with a smile, "It won't always be like this."
……
Nelson and Alicia returned to New York to complete the follow-up to the Twitter acquisition. Now, after paying 170 million to acquire 85% of Twitter's shares, William Chen has completed absolute control of the company and served as the company's chairman.
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 will only send his own people to oversee the company's day-to-day operations and financial situation. They will also provide their own opinions on the direction of management based on their previous experience, but they will also respect the opinions of the management team for the main company operations.
If you come to a world that is paradoxical from your previous life, and find that even the great commander of the United States has become a person you have never heard of, how likely is it that you still invest according to the memory of your previous life?
Just like William Chen did not sell Building 666 at the beginning, and then used the money to invest in those companies that he knew in his previous life would become giants in the future, because for the reborn, change is Worst of all, the unknown brings fear.
Most of the reincarnated people initially only rely on the memories of their previous lives to achieve financial freedom. When you find that so many things have gone off the rails, how can you confidently think that those companies that were successful in their previous lives can still succeed now?
Everything can be changed. It may not be Apple but the Orange Company that leads the development of smartphones; it may not be Tesla but Godzilla who initiated the electric car 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 certainly 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.
Chen William originally had this plan in mind, and wanted to stay for the first time, so that he could leave a certain amount of capital and wait for the arrival of those windfalls. But now it's different, he has Future Bank, and with the success of his investment, he has more than $2 billion in funds.
So now, he has the confidence to make a bet, so he dares to acquire Twitter and other companies that he is familiar with in his previous life. Because even if the world changes, and those companies are not as successful as in the previous life, he will still not be hurt, and he will still have the capital to bet again.
So after Nelson returned to New York, William Chen asked him to meet. Nelson is a smart person. At first, when he received a call from Chen William and asked him to meet, he subconsciously thought that the other party had another business to hand over to him, but he immediately rejected this possibility.
Because when Chen William had something to entrust himself with, he usually said it on the phone, but this time he didn't say anything, just wanted to meet and talk with him. The meaning of this made him feel a faint feeling in his heart. guess.
Sure enough, after the meeting, Nielsen's guess was confirmed. William Chen offered him an option - to leave his current Deloitte consulting firm and work for William Chen.
William Chen plans to divide the Meta investment company into two departments: securities investment and equity investment. The securities investment department is in charge of John Paulson, using the company's free funds and future private funds to invest in securities; and the manager of the equity investment department Candidate, William Chen chose Nielsen.
After several collaborations, William Chen appreciates Nielsen's ability. And he was consulting at Deloitte at this time, not an important management, and relatively young, it can be said to be very malleable.
He will have many acquisition and investment plans in the future, and he needs a suitable candidate to execute instead of himself. Many of those well-known investment talents are over 40 years old, with Chen William's previous reputation and his age~ www.novelhall.com~ It is not so easy to convince those people of their own judgment. And Nelson, regardless of age or ability, is the most suitable candidate for him at this time.
Actually, after hearing William Chen's invitation, Nielsen was indeed a little moved. He is also aware of his situation. Although he is confident in his abilities, he is only a small supervisor in Deloitte Consulting. And as a top consulting firm within the world's TOP3, Deloitte's competitive pressure is also very great.
Don't think that American companies are only meritocracy. The diseases of large companies are widespread. Therefore, in such a large company, in addition to ability, luck is also very important to be promoted to the top. Nielsen dare not do that. Be confident that you can actually sit in those positions.
And now in front of him, there is such an opportunity, so that he can have a more full opportunity to display his talents. William Chen proposed that if he accepts this position, he will not only get a basic salary of one million yuan a year, but also have more than one billion US dollars for him to invest. Of course, most of these funds must be invested under Chen William's instructions, but he still has a certain amount of freedom to choose investment.
Maybe about Chen William, there are still many people who have some negative views on him because of his previous reputation. But Nelson has cooperated with William Chen several times. After these contacts, he can see a completely different image from the reports and legends, and his opinion of him will not be affected by those news.
He is a decisive and adventurous character, so after a little consideration, he accepted Chen William's invitation, saying that he would submit an application for resignation to Deloitte Consulting as soon as possible, and after the handover over there, he would join as soon as possible and become a Meta The manager of the equity investment department of the investment company.
Of course, the specific principles of these two types of bonds are very troublesome to explain. It can be simply understood as: subprime loans are the loan grades with the lowest credit for borrowers, so the risks are high and the interest is 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 earn relatively high returns because subprime loans rarely default.
CDS is a default swap bond to hedge the risk of CDO. It is almost the agreement that the borrower will be compensated for default. It is equivalent to the insurance of CDS. The values of CDO and CDS are opposite. The sharp drop in the price of CDO means that the risk of default by subprime lenders increases, and the value of the corresponding CDS will increase due to the increased possibility of being compensated.
Therefore, when the current real estate boom and housing prices continue to rise, the price of CDOs is getting higher and higher, while the price of 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, that is, short CDOs and buy CDSs. It's just that he will use a complex set of strategies to continue this process. Once the subprime mortgage crisis breaks out, then these investments he has made will usher in rich harvests.
According to John Paulson's prediction, once the subprime mortgage crisis broke out, as the crisis deepened, this strategy he made could be reported at least 10 times. Of course, the specific profit depends on the severity of the crisis. The crisis will spread deeper, so more than 30 times, 50 times, or even 100 times the return is very likely.
William Chen was still very satisfied with John Paulson's answer. At the end of the conversation between the two, William Chen decided to set up the No. 1 Fund in Meta Investment Company with 500 million US dollars. This fund is the company's self-operated fund, with John Paulson as the fund manager. These funds are used to implement the funds he made. strategy, from now on, open a position to short CDO and buy CDS.
In order to motivate John Paulson, William Chen promised that he could eventually get 5% of the profit of the fund as his personal commission. And if this fund can perform well, William Chen will also establish a private equity fund for him that is open to the public.
These conditions of William Chen made John Paulson very satisfied. After all, the fund he controlled before was less than 200 million US dollars, and now William Chen directly took out 500 million US dollars to build a company for him. Funds, and the opportunity to run another sizable private equity fund, these are all things John Paulson has dreamed of after two years of cold reception on Wall Street.
What he hopes most now is to have the opportunity to use his investment performance 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.
……
Today, William Chen was in a good mood, and he was always smiling when he took the class in the afternoon. It's just that Erica doesn't seem to be like this. She behaves as if what happened last night had never happened. She still has the same attitude as yesterday. Talking about the topic, this made William Chen almost suspect that everything that happened last night was a dream.
Sometimes it's really hard to guess what a woman is thinking, especially now that what should have happened to both of them has already happened. William Chen doesn't understand why she deliberately made such a gesture.
"Erica, I think we should talk frankly." When the meal was over, William Chen looked at Erica opposite and said.
"Oh? About what?" Erica asked lightly.
"For example, what happened last night."
"I forgot what happened last night." Erica took a sip of the thick soup and frowned slightly. She glanced at William Chen and turned her eyes to the window: "Since you said that, William, I hope you Knowing that we are now a relationship between teachers and students, and other things that have nothing to do with this, I hope you can forget about it."
"It's really just like this?" 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 faster.
"Yes, that's all. At least for now."
The words behind her were very light, almost speaking to herself, but she was still captured by Chen William. He gave Erika a deep look and said with a smile, "It won't always be like this."
……
Nelson and Alicia returned to New York to complete the follow-up to the Twitter acquisition. Now, after paying 170 million to acquire 85% of Twitter's shares, William Chen has completed absolute control of the company and served as the company's chairman.
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 will only send his own people to oversee the company's day-to-day operations and financial situation. They will also provide their own opinions on the direction of management based on their previous experience, but they will also respect the opinions of the management team for the main company operations.
If you come to a world that is paradoxical from your previous life, and find that even the great commander of the United States has become a person you have never heard of, how likely is it that you still invest according to the memory of your previous life?
Just like William Chen did not sell Building 666 at the beginning, and then used the money to invest in those companies that he knew in his previous life would become giants in the future, because for the reborn, change is Worst of all, the unknown brings fear.
Most of the reincarnated people initially only rely on the memories of their previous lives to achieve financial freedom. When you find that so many things have gone off the rails, how can you confidently think that those companies that were successful in their previous lives can still succeed now?
Everything can be changed. It may not be Apple but the Orange Company that leads the development of smartphones; it may not be Tesla but Godzilla who initiated the electric car 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 certainly 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.
Chen William originally had this plan in mind, and wanted to stay for the first time, so that he could leave a certain amount of capital and wait for the arrival of those windfalls. But now it's different, he has Future Bank, and with the success of his investment, he has more than $2 billion in funds.
So now, he has the confidence to make a bet, so he dares to acquire Twitter and other companies that he is familiar with in his previous life. Because even if the world changes, and those companies are not as successful as in the previous life, he will still not be hurt, and he will still have the capital to bet again.
So after Nelson returned to New York, William Chen asked him to meet. Nelson is a smart person. At first, when he received a call from Chen William and asked him to meet, he subconsciously thought that the other party had another business to hand over to him, but he immediately rejected this possibility.
Because when Chen William had something to entrust himself with, he usually said it on the phone, but this time he didn't say anything, just wanted to meet and talk with him. The meaning of this made him feel a faint feeling in his heart. guess.
Sure enough, after the meeting, Nielsen's guess was confirmed. William Chen offered him an option - to leave his current Deloitte consulting firm and work for William Chen.
William Chen plans to divide the Meta investment company into two departments: securities investment and equity investment. The securities investment department is in charge of John Paulson, using the company's free funds and future private funds to invest in securities; and the manager of the equity investment department Candidate, William Chen chose Nielsen.
After several collaborations, William Chen appreciates Nielsen's ability. And he was consulting at Deloitte at this time, not an important management, and relatively young, it can be said to be very malleable.
He will have many acquisition and investment plans in the future, and he needs a suitable candidate to execute instead of himself. Many of those well-known investment talents are over 40 years old, with Chen William's previous reputation and his age~ www.novelhall.com~ It is not so easy to convince those people of their own judgment. And Nelson, regardless of age or ability, is the most suitable candidate for him at this time.
Actually, after hearing William Chen's invitation, Nielsen was indeed a little moved. He is also aware of his situation. Although he is confident in his abilities, he is only a small supervisor in Deloitte Consulting. And as a top consulting firm within the world's TOP3, Deloitte's competitive pressure is also very great.
Don't think that American companies are only meritocracy. The diseases of large companies are widespread. Therefore, in such a large company, in addition to ability, luck is also very important to be promoted to the top. Nielsen dare not do that. Be confident that you can actually sit in those positions.
And now in front of him, there is such an opportunity, so that he can have a more full opportunity to display his talents. William Chen proposed that if he accepts this position, he will not only get a basic salary of one million yuan a year, but also have more than one billion US dollars for him to invest. Of course, most of these funds must be invested under Chen William's instructions, but he still has a certain amount of freedom to choose investment.
Maybe about Chen William, there are still many people who have some negative views on him because of his previous reputation. But Nelson has cooperated with William Chen several times. After these contacts, he can see a completely different image from the reports and legends, and his opinion of him will not be affected by those news.
He is a decisive and adventurous character, so after a little consideration, he accepted Chen William's invitation, saying that he would submit an application for resignation to Deloitte Consulting as soon as possible, and after the handover over there, he would join as soon as possible and become a Meta The manager of the equity investment department of the investment company.
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