My Age of Investment

On April 1st, U.S. stocks went into riot across the board!

The S\u0026P 500 index rose 3.59% and closed at 1370.18 points on the day.

Goldman Sachs shares rose 6.94% to close at $176.86.

Wells Fargo shares rose 8.21% to close at $31.49.

…

The three major indexes, large financial stocks, and large technology stocks all rebounded, regaining lost ground and sweeping away the haze caused by Bear Stearns' near bankruptcy last month.

Many people and institutions are optimistic that the subprime mortgage crisis has been safely passed and that U.S. stocks will rise again.

The media and rating agencies are also very happy. They publish news and reports, all of which are optimistic about the market outlook.

In this case, short sellers are in trouble.

Envision Capital shorted the S\u0026P 500 at 1,400 and shorted Goldman Sachs and Wells Fargo at $198 and $28.

The comprehensive rebound in U.S. stocks has caused Vision Capital's subprime mortgage portfolio to give back its short-selling profits in the past three months. Some individual stocks, such as Wells Fargo, even suffered small losses.

However, Xia Jingxing did not panic, but began to deal with it calmly.

At the same time, he directed Liu Hai and Jiang Ping to start liquidating part of the investment portfolio. Capital preservation or small losses and small profits were acceptable. The key was to withdraw funds from the stock market and not allow the U.S. stock market to ravage them;

On the other side, he directed the two of them to take the funds to close the positions and begin to observe the price trends of various investment targets, looking for suitable opportunities. After this round of rebound was over, they would immediately go short at a higher price.

Although Xia Jingxing is a staunch bearish person, he does not intend to suffer the cyclical rebound of the US stock market. On the one hand, he wants to ensure the safety of his position, and on the other hand, he can also gain more profits.

Seeing Xia Jingxing being so calm, Liu Hai and Jiang Ping also relaxed their minds and led the team to play various technical operations and constantly optimize the investment portfolio.

Because of its thick health bar and thorough preparations, Vision Capital is considered the most confident and patient short seller.

Other short sellers are different. There are those who liquidated their positions, there are those who lost confidence and stopped their losses and quit short selling, and there are even those who were so angry that they revealed in front of the media that they were shorting a certain company.

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"That guy is a cancer in the industry. For his own selfish gain, he slandered a long-established investment bank with a glorious history of 158 years and a good reputation."

"These short sellers are the main culprits that brought Bear Stearns to the brink of bankruptcy and magnified the impact of the subprime mortgage crisis. They spread rumors to affect a company's stock price to achieve their ultimate goal of short selling profits."

"But we are not Bear Stearns, and those dirty tricks will not work for us! We now have US$30 billion in cash and US$64 billion in easily liquidated assets. We are the investment bank with the highest liquid asset ratio on Wall Street. There is no one!"

"I have suggested that the U.S. Securities and Exchange Commission immediately intervene in the investigation. The SEC accepted our request and stated that it will thoroughly investigate these hedge funds that violate the rules and short the market!"

…

The computer placed on the coffee table was playing the news. An old man in his sixties in a suit and tie had just walked out of the SEC office building and was immediately surrounded by a group of reporters outside.

Then in front of reporters, the old man made a stern accusation against the short seller.

After watching the video, Xia Jingxing picked up the coffee on the table, then leaned on the sofa and tasted it leisurely.

Abel, who was sitting aside, was a little uneasy, "Darren, I didn't expect things to develop like this. Otherwise, we will redeem the funds during the next redemption period.

Right now, we can’t take the money away, so…”

Xia Jingxing put down his coffee and waved his hand to Abel, "You are worrying too much. Don't you think David Einhorn has a lot of personality?"

"ah?"

Abel was stunned for a few seconds, and then said: "How can a fund manager like him actually disclose that he is shorting Lehman Brothers.

Although this may cause the market to follow the trend of selling and cause the stock price to fall, it is more likely to cause the shorted company to be vigilant and try every means to maintain the stock price and increase the difficulty of short selling.

Our company has been planning for Lehman for so long and deeply. If Einhorn disrupts our plans, I don’t know how many variables will be added. "

As he spoke, Abel hammered his forehead, looking very annoyed.

David Einhorn is the founder of Greenlight Capital and the sub-fund manager selected by Abel for the Daxue No. 2 hedge fund of funds.

Greenlight Capital carries Abel's ardent hopes. He hopes that this fund will perform well and help him win more trust from his boss.

But the other party was better off, using Vision Capital's money to short Lehman Brothers. This was actually nothing, and it was even a good thing, because the other party and the company were in the same camp, not opposites.

What the other party should never do is announce the short-selling operation. Now, Lehman has begun to take action to maintain its stock price. Reporting to the SEC is the first step. Who knows what Richard Fuld will do next? What a big move.

Abel did not have the ability to predict the future, and he was worried that Einhorn's recklessness would ruin the company's plans.

After all, that was Lehman, and it was still powerful on Wall Street.

What’s more, to this day, Lehman has not posted any losses in its financial reports! Who knows what big move Leman is still holding back.

Yes, Lehman did not lose money last year, and the first-quarter financial report released this year was still profitable. Although revenue and profits dropped significantly compared with the same period last year, there was no loss.

Among the major investment banks on Wall Street, only Goldman Sachs can beat this performance. Merrill Lynch and Morgan Stanley both reported serious losses in their first-quarter financial reports.

Not only was Xia Jingxing very suspicious of the authenticity of Lehman Brothers' financial report, but Einhorn of Greenlight Capital was also very skeptical. He also publicly questioned Lehman Brothers' use of "special" accounting techniques at an investor meeting.

Although Einhorn's words were relatively reserved, it still made Lehman Brothers CEO Fuld furious. He reported to the SEC and was interviewed by reporters. He wanted to stab Einhorn with a knife immediately.

In Xia Jingxing's eyes, Fuld's behavior was extremely guilty.

As far as he knows, Fuld also approached Buffett last month, hoping that Berkshire Hathaway would invest in Lehman.

However, because the share price and dividend conditions could not be reached, Fuld terminated the negotiations very forcefully.

“What’s Lehman Brothers’ stock price now?”

Abel reported very accurately: "Today's closing price was $37.02."

“Remember at the beginning of the year you still had just over $60, right?”

Xia Jingxing asked with a smile. Their short position was $60. In fact, they had already made a small profit.

“Yes, the stock price at the beginning of the year was indeed over 60 US dollars. Last month, due to the Bear Stearns incident, Lehman’s stock price fell by 30% in two trading days.

But on the third day, due to the release of the first quarter financial report, the stock price soared 46% to $46.49. That day, the corpses of short sellers were strewn across the field and rivers of blood flowed.

Fortunately, our safety cushion was thick enough, otherwise we would have been killed by Fuld's trick.

The short sellers who followed the trend of shorting financial stocks last month were all in bad luck, and many institutions were so unlucky that they no longer dared to go short. "

Xia Jingxing smiled and nodded. Since there is no limit on the rise or fall of U.S. stocks, short selling is still very dangerous. This is also an important reason why he chose low leverage and had so much cash in hand. It would be bad if someone counter-hunted him.

He estimated that with so many short sellers beaten, few institutions would dare to short U.S. stocks in the next month or two. This would provide a favorable cover for Envision Capital’s next actions.

Abel continued: “After Einhorn publicly questioned Lehman’s financial report and disclosed Greenlight Capital’s short-selling operation, Lehman’s stock price fell in the past two days, falling below $40.

However, as long as Lehman releases some more good news, or produces a financial report in the second quarter that is more beautiful or similar to that in the first quarter, short sellers may be forced to liquidate their positions again. "

"No chance. From the moment Fuld rejected Buffett, Lehman Brothers entered a countdown to thunder."

Abel didn't know why the boss sounded so determined. Before he could ask a question, he heard the boss say again: "Make an appointment with Einhorn for me. I want to meet this windmill knight!"