My Age of Investment

After explaining to Liu Hai, Xia Jingxing looked at Jiang Ping, who was sitting quietly aside, and asked with a gentle smile: "Brother Jiang Ping, where are you?"

“I took my team to the Chicago Board of Trade these days and talked with the group’s executives.

The S\u0026P 500 index is fluctuating around 1,400 points these days, and the price of one contract is about US$350,000. "

Jiang Ping said with a smile: "If we directly short-sell 50,000 to 60,000 contracts and spend more than 20 billion US dollars, the market volatility will be quite large.

I suggest that just like Liu Hai when he shorts individual stocks, he also uses stock index option tools, such as buying S\u0026P 500 index put options. "

Xia Jingxing smiled slightly. The principles of index options and individual stock options are the same. Find an opponent to gamble together, but the subject matter or gambling tools are different. One bets on the index and the other bets on the stock price.

During the second wave of short selling subprime mortgages, the tasks he assigned to Liu Hai and Jiang Ping were still the same as before, one was responsible for individual stocks, and the other was responsible for indices and foreign exchange.

"Okay, you can figure it out. When the final plan comes out, just give me a look."

In Xia Jingxing's memory, the three major U.S. stock indexes, the S\u0026P, Nasdaq, and Dow Jones, seemed to have not fallen as violently as some individual stocks.

Take the S\u0026P 500 Index as an example. Just like the CSI 300, it selects hundreds of listed companies and adds them together according to different weights to form a representative data called the index, which reflects the performance of the entire stock market. Change is also what people often call the market.

However, Xia Jingxing believes that constituent stocks of the S\u0026P 500 Index such as Lehman Brothers and AIG will definitely outperform... or beat the market.

From this perspective, it seems that you can make more money by shorting individual stocks.

But, then again, Envision Capital now has too much capital, and all of it is shorting financial stocks, which is difficult to operate and very risky.

“In addition to these two methods, we can also consider shorting or longing ETF funds.”

Jiang Ping introduced with a smile: "Take the ETF fund of the S\u0026P 500 index as an example. We can either choose to buy an ETF fund that is three times short, or short an ETF fund that is three times long, both of which can achieve the purpose of shorting the index. .”

ETF index funds refer to index funds that can be traded on the stock exchange like stocks. They actually represent the ownership of a basket of stocks. Its trading price and fund share trend are basically consistent with the index being tracked.

For example, if the S\u0026P 500 ETF fund has an index increase of 1%, the fund will also increase by 1%.

The triple long ETF fund Jiang Ping mentioned is slightly different from ordinary ETF funds. It means that the index rises by 1% and the fund rises by 3%.

The opposite is true for triple-shorting ETF funds. If the index falls by 1%, the fund will rise by 3%; if the index rises by 1%, the fund will fall by 3%.

There is no need to pay a deposit, and there is no need to worry about liquidation. You can enjoy the joy and excitement of doubling your money... and doubling your losses.

"Through the TRS total return swap tool, Goldman Sachs and Morgan Stanley provide us with three times leverage, which is then multiplied by three times the ETF short-selling fund, which can reach a maximum leverage effect of nine times."

Jiang Ping looked at Xia Jingxing with a smile, "The risks are great, but the benefits are also great.

In addition, regarding the risk of liquidation, just look at the triple leverage of Goldman Sachs and Morgan Stanley.

I think we can allocate a small amount of ETF funds to achieve the effect of diversifying investments and reducing the impact.

At the same time, there is also a problem that needs to be paid attention to - market shock loss.

In a market that is rising or falling in one direction, leveraged ETF funds can amplify returns.

In volatile market conditions, the index returns to its original point after a few days of fluctuation. The net value of unlevered ETF funds remains unchanged, but the net value of leveraged ETF funds will decrease.

In addition, the management fee of leveraged ETF funds is relatively high, more than 20 times that of ordinary ETF funds, and the annualized fee is nearly 1%. "

Xia Jingxing nodded slightly. If there are advantages, there will naturally be disadvantages. It cannot be perfect. Otherwise, everyone would just buy the S\u0026P 500 Index triple long ETF fund.

Judging from past development experience, the major U.S. stock indexes will always regain their lost ground. If they can hold on, they will definitely make money, but the income will not be too high.

But adding three times the leverage is very impressive. Not only do you not have to worry about liquidation, but your profits are also tripled.

It seems to be very suitable for long-term investment, but leverage friction can kill ordinary investors.

Xia Jingxing nodded, "Okay, let's also allocate some ETF funds. Are there any other short-selling tools?"

Jiang Ping smiled and said: "VIX panic index!"

Xia Jingxing was stunned for a moment, then he realized what he was doing, and his expression became very surprised: "Are you talking about that unpopular thing that measures the 30-day expected volatility of the S\u0026P 500 Index?"

Jiang Ping smiled lightly, "Yes, that's it. The higher the VIX index, the more it means investors smell danger and are worried about the stock market;

The lower the index, the more moderate the stock index changes will be.

VIX vividly reflects the degree of investor panic about the market outlook, so it is also called the "fear index" or the volatility index.

Generally speaking, even in a bear market, the VIX index will not change much and shows a slow downward trend. "

Speaking of this, Jiang Ping looked at Xia Jingxing and his voice suddenly rose, "But once there is an economic crisis like the one you predicted by Jingxing, which is comparable to the Great Depression in the 1930s, the unpopular VIX index will probably skyrocket." !

My recent investigation found that many options traders are using derivatives to short the VIX index and make easy money.

I think we might as well take some money and bet with them. Maybe the VIX index can reach a record high, and the income will be very considerable. "

Xia Jingxing pinched his chin. This was another kind of bet. Betting on the U.S. stock market and whether the S\u0026P 500 Index would go on a roller coaster? Will the market panic?

He remembered that in his previous life, there was a courier retail investor in the United States. He had been shorting the VIX index for five years, betting that the United States would not have a financial crisis, that the country would be prosperous, and that the bull market would continue. Then he accidentally turned his $500,000 into It became $15 million.

The operation is very simple and mechanical, but it's hard to say how easy it is for people to make money. After all, it's difficult to combine knowledge and action. Doing Moutai for five consecutive years will not be any different.

However, it can also be seen from this incident that the VIX index is indeed useless. It has been silent for three years and became a blockbuster.

"Okay, you can also bet on the VIX index!"

Xia Jingxing thought for a while and added: "Gamble with leverage! Either make a lot of money, or throw it into the water."

Jiang Ping didn't say anything. He decided to invest tens of billions of dollars in it. He was sure that the U.S. stock market would collapse next. He didn't care about this small amount of money. He just gambled and it was over.

The VIX index was created in 1993. In 2004, the Chicago Board Options Exchange began to link futures and options to the index. It did not take long to develop, but the trading scale increased rapidly.

However, there is still a big gap with the mainstream S\u0026P, Nasdaq, and Dow, and it cannot carry too much funds.

"Futures, options, ETF funds, and volatility of the three major indexes."

Xia Jingxing counted it on his fingers and couldn't help but lament that finance had been manipulated by the Yankees. It was just an index, and a large number of derivatives were created, and derivatives were built on top of them.

"The investment in these index derivatives will all be left to you, Brother Jiang Ping. I will only confirm the relevant contract plan. After it is approved, I will leave all the details to you on how to implement and operate it."

Seeing Xia Jingxing's solemn tone, Jiang Ping's heart began to feel heavy.

This was 20 billion U.S. dollars, and it was all handed over to him, which made him both excited and felt as much pressure as a mountain.

"I try my best!"

Looking at Jiang Ping, who spoke concisely and to the point, Xia Jingxing nodded slightly. He knew that this was the kind of person he was. He didn't like long speeches, but preferred to prove himself with actions.

"Don't be too stressed. The general direction has been set and will not be changed midway.

The winning or losing of this game has actually been decided from now on. The execution of the transaction is just a matter of how much you lose and how much you win. "

Xia Jingxing patted Jiang Ping's shoulder in a friendly manner, telling him not to be too stressed.

Then he looked at Abel, who usually talked a lot, but rarely spoke today.

"Abel, the fundraising for the US$5 billion PE fund is about to end. What are your plans next?"

Hearing his boss call him, Abel's belly bulged, and he replied in a loud voice: "I plan to devote all my energy to the selection of sub-fund managers for the Daxue No. 2 hedge fund of funds and make it operational as soon as possible. Get up and stop holding the company back."

Regardless of Abel, Xia Jingxing himself had almost forgotten that Vision Capital had such a useless fund.

The reason why it is said to be useless is because it is difficult for outside fund managers to catch up with Envision Capital's rate of return. If the gap is large, the LPs who invest in this fund may suspect that they are engaging in behind-the-scenes operations.

Xia Jingxing was too lazy to think too much and asked, "How is it? How is the work going recently? Have you found a suitable candidate?"

Abel chuckled, "I actually found two, one is called Greenlight Capital and the other is called Global Investment."

Xia Jingxing frowned slightly. The other name was too popular and he had no impression of it.

But he had heard of the name Greenlight Capital. The founder, David Einhorn, had also published a book called "Cheating All the Way to the End," which was very Wall Street style.

"Okay, I'll leave all the $500 million to you. You can do whatever you want."

When the boss said this, Abel suddenly felt unsure.

When he was about to apply for coaching from his boss, Xia Jingxing waved his hand and said, "Don't ask me, this is your job. Whether you do it well or not is entirely up to you."

Abel knew that his boss was testing him. If he performed well, he might have the opportunity to take charge on his own in the future.

Thinking of this, Abel stopped being pretentious and worried, nodded and said: "Okay, Darren, don't worry, Daxue No. 2 Fund will never damage the company's brand."

Xia Jingxing smiled and nodded without saying much.