My Age of Investment

In a blink of an eye, the time has come to the end of January.

After more than half a month of building positions, Vision Capital has established a short position of US$14 billion in U.S. stocks. This is only the underlying stock and does not include put options.

These days, the departments of Goldman Sachs and Morgan Stanley that serve Vision Capital are busy contacting institutional investors and brokering put option transactions between major financial institutions and Vision Capital.

At present, this matter has some clues. If things go well, Envision Capital will allocate the remaining 6 billion US dollars into put options, plus 14 billion short sales of the underlying stocks, forming a total net short position of up to 20 billion US dollars. .

In terms of stock index futures, options and other derivatives, Vision Capital has also established short positions of up to US$10 billion on the three major stock indexes, and the remaining US$10 billion will be invested later.

Vision Capital paid $20 billion in deposits to Goldman Sachs and Morgan Stanley, and the two investment banking giants provided a total of $60 billion in funding to Vision Capital.

The U.S. stock market is the world's largest stock trading market, accounting for slightly more than half of global stock trading.

Xia Jingxing estimated that investing US$40 billion in U.S. stocks would be enough. The remaining US$20 billion he wanted to invest in markets outside the United States.

If the outside world cannot digest it, the remaining funds will be invested back in US stocks.

Short selling involving financial products such as stocks, indices, options, etc. is no different than shorting subprime mortgage bonds the year before and last year. Trading requires more caution and concentration.

CDS contracts are all conducted through over-the-counter transactions. The two parties to the transaction can negotiate through emails or phone calls, and then endure the initial losses, wait for the policy to appreciate, and finally sell at a profit.

The second wave of short selling this year is slightly different. The rebound of stock prices and indexes requires special attention. If you are not careful, it can easily capsize.

The CDS contract was a bet on the general trend, while the stock price and index required more detailed control.

Therefore, Xia Jingxing has not been idle these days and participated in the formulation of various short-selling plans.

Generally speaking, he is confident about most of the short-selling operations this time. A small part of the operations are not sure, and they are the results of the analysis led by Liu Hai and Jiang Ping.

…………

…………

In the small house in Omaha, two old men, Buffett and Charlie Munger, finished playing table tennis, took the towel handed by Li Lu, and wiped the sweat from their foreheads.

"Young people, if you missed the opportunity to short subprime mortgages last year, do you feel any regret when you see others making billions of dollars, or even more than 10 billion dollars?"

While speaking, Buffett glanced at Li Lu, who looked as usual and seemed to have no regrets at all.

Li Lu shook his head slightly, "Teacher Munger once told me that although you can make a lot of money by shorting subprime mortgages, the government and taxpayers will ultimately foot the bill.

After hearing this, I suddenly woke up and gave up short selling. "

Li Lu shrugged, "So, there is nothing to regret. There are still a lot of investment opportunities in the market."

Charlie Munger smiled, becoming more and more satisfied with himself as a Chinese disciple.

Buffett nodded, "Yes, value investing allows for countless failures, but speculation... as long as you fail once, you may die without a burial place."

Making quick money can paralyze a person's investment judgment and can also lead to addiction. "

Li Lu laughed beside him, who could understand the bitterness in his heart!

Go ahead and speculate, I have clearly determined the investment direction, but these two old men dissuaded me...

Well, he gave up because he was not strong enough.

"Have you had any contact with Darren recently?" Buffett glanced at Li Lu.

Li Lu shook his head, "We haven't had much contact. Now he and I are no longer on the same level."

Buffett laughed loudly, walked over and patted Li Lu on the shoulder: "Don't be discouraged, I am more optimistic about your future development!"

Speaking of this, Buffett looked up to the sky and sighed: "Darren used to be a great guy! But what a pity! He seems to have caught the bad habits of Wall Street now."

Buffett didn't say anything further. He believed that Li Lu understood what he meant.

Li Lu did understand, and a poem came to his mind: Watch him build a tall building, watch him entertain guests, watch his building collapse...

He accurately predicted the subprime mortgage crisis and kindly shared this information with Xia Jingxing.

The other party had clearly begun to short subprime mortgages at that time, but he pretended to be nonchalant and paralyzed him, thus giving up shorting subprime mortgages.

He just lacked confidence at the time. If he knew that Envision Capital was also shorting subprime mortgages on a large scale, he would have jumped on the bandwagon no matter what.

As for the dissuasion from Munger and Buffett, it was just for his own inner comfort.

The three of them came to the living room of Buffett's home and chatted. Li Lu mentioned a recent market news.

"Recently, Goldman Sachs and Morgan Stanley have released a lot of news. There is a powerful buyer who wants to buy a large amount of the five major investment banks and the five major banks, as well as AIG's put options."

Buffett narrowed his eyes slightly. Li Lu's words reminded him of his classic operation on Coca-Cola.

"If my judgment is correct, it should be those big short sellers who made a lot of profits last year who are looking at the market outlook and want to short financial stocks in this way."

Munger agreed with the old man's judgment and nodded: "Yes, those greedy guys are afraid that a serious financial crisis will not break out in the United States."

Li Lu asked: "Do you two think there will be a financial crisis?"

Buffett said calmly: "There is a high probability that it will break out, but it is still difficult to draw a conclusion on the scale of the crisis."

Li Lu nodded slightly, feeling that it made sense. Now the Federal Reserve is doing its best to rescue the market, and the situation has not collapsed to the point where it is difficult to save.

"The put option you mentioned, I have analyzed it these days and think I can sell part of it."

Buffett said confidently: "Banks and investment banks are good investment targets. Even if the stock price drops for a while, it will rise back soon."

Li Lu listened carefully. Buffett is not only a stock trading expert, but also an options trading expert.

Berkshire Hathaway often uses options to perform some subtle operations, and obtains a large amount of premium, also called option premium, by selling options.

You may face a big loss in the early stage, but after the stock price rebounds, you will get the profit from the stock price rebound and the investment income from option fees and option fees, eating one fish and three things.

“If you’re interested in options, you can also try playing.”

Buffett looked at Li Lu with a smile. Seeing that he was well-behaved and sensible, he didn't mind taking him to play.

Buffett took him to play with him. Li Lu didn't even think about such a good thing. He immediately blurted out: "Okay! I can learn a thing or two from you."

"Hahaha!"

Buffett smiled happily and said, "Okay, let me show you my investment philosophy."