My Age of Investment

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After attending the Ao Guanhai couple's Hongmen Banquet, Xia Jingxing and Kristina left the White House and returned to the hotel where they stayed, where they played poker all night.

Early the next morning, the two of them, who were sleepy and exhausted, reluctantly parted ways.

Kristina returned to Silicon Valley alone, while Xia Jingxing went to New York.

As soon as Xia Jingxing arrived at Building 40 on Wall Street, he quickly convened a meeting with the senior management team of the New York office, headed by Liu Hai and Jiang Ping.

The meeting mainly discussed one thing, the action of closing the net!

From 2006 to 2009, Envision Capital cast a large fishing net for nearly three years. Starting from this month, the net will finally be closed. The specific number of fish caught can also be weighed with a steelyard.

"The $5 billion put options held by our team have expired one after another and are being delivered."

Liu Hai counted on his fingers: "The five major banks, the remaining two major investment banks, AIG Insurance, and some lower-ranked listed banks and financial stocks are all on this short list."

Xia Jingxing had a faint smile on his face. Of the 20 billion U.S. dollars managed by Liu Hai's team, only the 5 billion U.S. dollars and its profits were left in the pocket.

In fact, all of the US$5 billion had been spent a year ago as option premiums paid to the counterparty, the seller of individual stock put options.

Envision Capital has obtained more than ten to two billion put options, such as Citibank 100 million, JP Morgan 100 million, and Bank of America 100 million...

Among them, each option corresponds to a right to sell the stock to the counterparty at a high price.

As financial stock prices continue to plummet, these options have transformed from a pile of waste paper into a mountain of gold.

Jiang Ping then reported: "The hundreds of thousands of futures forward contracts of the three major indexes held by our team, as well as financial derivatives contracts such as ETF funds and ETF put options corresponding to the three major stock indexes, are all being delivered."

Xia Jingxing nodded slightly. Jiang Ping's team spent a total of 20 billion US dollars on the three major indices and their derivatives.

Among all the trading teams under Vision Capital, Jiang Ping's team was the last to exit with profits, and it was also the one that Xia Jingxing had the highest hopes for.

Abel rushed back to New York from Silicon Valley a few days ago and attended the meeting today. He also briefly talked about the income of the fund of funds he manages.

Vision Capital's second wave of financial short-selling operations in response to the financial crisis has almost come to an end, and all fronts are withdrawing and counting the spoils.

…………

…………

Omaha, Nebraska.

Inside the offices of Berkshire Hathaway.

Buffett gently put down the document in his hand, then took off his glasses, rubbed his eyes, and said: "According to the signed option agreement, we have to buy a total of 450 million shares of the five major banks, right?"

Looking at the old man with a tired look on his face, Charlie Munger nodded slightly, and then sighed: "Yes, you and I both made a mistake and fell into a bottomless pit."

"But who could have predicted that even the stock prices of large U.S. commercial banks would halve?"

Buffett spread his hands and said, "I can't understand the current U.S. financial market more and more."

Charlie Munger said with a serious expression: "All this is thanks to the guys on Wall Street. Without their misbehavior, the financial crisis would not have broken out at all.

In other words, even if a financial crisis breaks out, the damage will not be as great as it is now, and the US$940 million in option premiums that have gone into our pockets will not need to be "returned." "

Buffett shook his head, his whole expression looking very depressed, "It's too late to say anything now. If this loss is included, then Berkshire Hathaway's fourth quarter financial report will become very disappointing." It’s ugly and may even drag down our full-year financial report.

Originally, we could maintain positive returns against the market, but if we include this loss, the return rate is in jeopardy and may become negative. "

As a disciple of Charlie Munger, Li Lu also came to attend the meeting today.

He listened numbly to the two big guys discussing the huge struggle in the options market, and he felt regretful in his heart.

After this battle, the halo of Buffett, the stock god, has been weakened a lot.

At least that's what he thought.

A year ago, Buffett vowed that he would take this great guy to "go big" in the options market.

He missed a good opportunity to short subprime mortgages and was feeling regretful.

When he heard that Buffett was going to take him to the options market to make big money, he didn't hesitate at all and immediately followed Buffett and sold a large number of put options.

Now he tastes the bitter consequences of blind investment.

Buffett made a mistake while racing and overturned, and so did he.

"Louis, how much did your Himalaya Capital lose this time?"

Buffett suddenly turned his head to look at Li Lu and asked with concern on his face.

Li Lu replied depressedly: "Almost a loss of 200 million US dollars."

Buffett nodded slightly and said, "This amount is very taxing for your hedge fund.

But don't feel discouraged. The investment journey is never smooth sailing. "

After speaking, Buffett pushed the paper document in front of Li Lu and motioned for the latter to open it and take a look.

Li Lu picked up the document and took a look, and immediately took a breath of cold air.

Selling Underlying: Citibank Put Option

Number of copies sold: 100 million copies

Option fee: USD 2.5/share

Validity period: 12 months

Execution price: $25/share

Current stock price: $1.5/share

Profit and loss: -$2.1 billion

…

Although he was mentally prepared, Li Lu still didn't expect Buffett to lose so much. He asked with a surprised look on his face: "A loss of US$2.1 billion in Citigroup alone?"

Buffett said calmly: "The stock price of Citibank has dropped too much, from US$40 to 50 a year ago to US$1.5 now.

Therefore, we only collected US$250 million in option fees, but paid a loss of nearly ten times.

This is the result of greed!

Of course, I think the CEO of Citibank should be sent to the gallows. Even if a pig were replaced as CEO, his performance would be better than his. "

Li Lu suppressed his laughter and continued to look at the documents.

JP Morgan lost $166 million.

Wells Fargo, profit of $123 million.

Bank of America lost $1.205 billion.

Wachovia Bank lost $624.5 million.

"A total loss of US$3.9725 billion on five bank stocks?"

Buffett nodded to Li Lu, "Yes! If my favorite Wells Fargo hadn't helped me get back on track, the loss might have exceeded US$4 billion."

After hearing this, Li Lu felt better and didn't blame Buffett as much as before.

Although it was Buffett who encouraged him to invest in the options market, he cannot entirely blame others for losing money.

The losses faced by Berkshire Hathaway this time are dozens of times greater than those of Himalayan Capital. Buffett should feel uncomfortable, so please be more considerate of each other!

Thinking of this, Li Lu's thoughts suddenly became clear.

He said: "Wells Fargo's stock is doing pretty well, with the current price of $14.23, and the option strike price is $15, resulting in a loss of $77 million on 100 million options.

However, since the option fee of US$200 million was received in advance, after deducting this loss, there was still a surplus of US$123 million.

As expected, the stocks you have always favored and held for twenty years have remained unmoved in the storm of the financial crisis! "

Buffett did not feel complacent because of these words, his face was still very heavy, and he said: "We are just lucky. If you observe carefully, you will find that the stock price trend of Wells Fargo is actually not good.

If the date of signing this put option had been a month or two later, or even a week or two, we might not only have been unable to make a profit, but might even have suffered a serious loss. "

Speaking of this, Buffett was also palpitating. Fortunately, there was Wells Fargo to cover up the scandal, otherwise this time it would really be a complete failure, and he would not be able to show his face to anyone.

Charlie Munger said at this time: "The 2008 financial report will be released soon. Have you figured out how to write a letter to shareholders?

Berkshire Hathaway suffered such serious losses in financial derivatives contracts this time, and it is difficult to explain the past.

You have always been against speculation in the past, but now..."

Charlie Munger spread his hands, thinking about taking care of his partners' face. He didn't say any more, but the meaning was expressed clearly enough. The stock god's divinity may be unstable!

Buffett frowned and remained silent.

Last year, with a net worth of $62 billion, he defeated Gates, who was worth $58 billion and has been the richest man for 13 times in a row, to become the world's richest man according to Forbes.

The richest man's throne has not yet been settled, and he is about to make a fool of himself.

Buffett suddenly asked: "Who do you think is competing against us?"

Li Lu said: "Isn't it Goldman Sachs and Morgan Stanley?"

Buffett shook his head, "This doesn't look like their handiwork. They're not that crazy."

Charlie Munger said: "Could it be the short sellers who profited from the subprime mortgage crisis last year?"

After thinking for a moment, Buffett said: "Forget it, it doesn't matter who it is anymore.

The top priority is to turn around Berkshire Hathaway's investment performance as soon as possible.

I plan to buy the US stocks at the bottom in the near future. Louis, do you want to follow me? "

Li Lu hesitated. In his opinion, Buffett was almost turning into Buffett. He still asked himself if he should follow? What if you step into a trap again?

Seeing the hesitation on Li Lu's face, Buffett smiled nonchalantly and said, "It doesn't matter, you can study the market more yourself.

In short, I think there is very little room for U.S. stocks to continue to fall.

I am greedy when others are fearful! This saying never goes out of style! "

Li Lu nodded, then changed the topic and talked about China's BYD.

In September last year, under Li Lu's recommendation and introduction, Berkshire Hathaway subscribed for 225 million BYD H shares at a price of HK$8 per share, accounting for approximately 10% of BYD's shares after completion of the placement. The total transaction price is approximately HK$1.8 billion, equivalent to US$230 million.

Buffett said: "New energy vehicles are an investment direction worthy of attention, and Ao Guanhai has been busy promoting his green energy plan recently."

Li Lu said: "I heard that Dai Lun also has a new energy vehicle company."

Buffett narrowed his eyes slightly, as if he suddenly thought of something.

His good friend Gates has been extremely proud of himself recently. He often mentions Darren to him, praising how great this great guy is and how he will become the next Buffett sooner or later.

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