My Age of Investment

   Chapter 1244 Bajiute

   After attending the Ao Guanhai couple's banquet, Xia Jingxing and Kristina left the White House and returned to the hotel where they were staying, and then they played poker all night.

   Early in the morning the next day, the sleepy and tired two parted reluctantly.

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

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

  The meeting mainly discusses one thing, closing the network!

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

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

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

  Xia Jingxing had a faint smile on his face. The 20 billion US dollars of funds managed by Liu Hai's team are now the only remaining 5 billion US dollars and their profits.

   In fact, all of the $5 billion was spent a year ago and paid as an option fee to the counterparty, the seller of put options on individual stocks.

   And Vision Capital has obtained ten or two billion put options, such as Citibank 100 million, JP Morgan 100 million, 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 the stock price of financial stocks continues to plummet, these options have turned from a pile of waste paper into a golden mountain.

  Jiang Ping immediately reported: "Our team holds hundreds of thousands of futures contracts on the three major indexes, as well as financial derivatives contracts such as ETF funds and ETF put options corresponding to the three major stock indexes, all of which are also being delivered."

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

   Among all the trading teams under Envision Capital, Jiang Ping’s team was the last to make a profit and exit, and it was also the one that Xia Jingxing had the most high hopes for.

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

  Envision Capital’s second wave of financial shorting against the financial crisis has almost come to an end here. All fronts are withdrawing and counting the spoils.

  …………

  …………

   Nebraska, Omaha.

   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 will buy a total of 450 million shares of the five major banks, right?"

   Looking at the tired old man, Charlie Munger nodded lightly, and then sighed: "Yes, you and I both lost sight and fell into a bottomless pit."

   "But who could have predicted that even the stock prices of large commercial banks in the United States would be halved?"

   Buffett spread his hands, "Now the US financial market, I can't understand more and more."

  Charlie Munger said with a serious expression: "All this is thanks to the guys on Wall Street, if it wasn't for their mischief, there would be no financial crisis at all.

   In other words, even if the financial crisis breaks out, the degree of harm will not be as great as it is now, and the $940 million in option premiums that went into our pockets will no longer need to be "returned". "

Buffett shook his head, his expression was very depressed, "It's too late to say anything now, if you count this loss, then Berkshire Hathaway's fourth-quarter earnings report will become very bad. It's ugly, and even drags down our full-year earnings.

   Originally, we could maintain a positive return against the market, but if this loss is included, the return rate is in jeopardy, or it will be negative. "

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

   He listened numbly to the two big bosses discussing this big tumble in the options market, and his heart was full of regrets.

   After this battle, the halo on Buffett's head was weakened a lot.

   At least in his mind.

   A year ago, Buffett vowed to take his awesome guy to the options market to "fight".

   He missed a good opportunity to short subprime mortgages at that time, and was in chagrin.

   Hearing that Buffett was going to take him to the options market to make a lot of money, he did not hesitate at all, and immediately followed Buffett and sold a large number of put options.

   Now he has tasted the bitter fruit of blind investment.

   Buffett overturned the car by mistake, and he also overturned.

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

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

  Li Lu replied in a depressed mood: "Almost a loss of $200 million."

  Buffett nodded lightly, "This number is a bit of a nerve-racking for your hedge fund.

   But don't feel discouraged, the investment road is never smooth. "

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

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

  Sell the underlying: Citibank put options

   Quantity sold: 100 million copies

   Option fee: $2.5/unit

   Validity period: 12 months

  Execution price: $25/share

  The current price of the stock: 1.5 US dollars / share

   Profit and loss: -$2.1 billion

  …

  Although he was mentally prepared, Li Lu still didn’t expect Buffett to lose so much, and asked with a look of surprise: “Citigroup alone lost $2.1 billion?”

   Buffett said calmly: "Citibank's stock price has fallen too much, from $40 to $50 a year ago to $1.50 now.

   So, we only charged $250 million in option premiums and paid nearly ten times the loss.

   This is the end of greed!

   Of course, I think the CEO of Citibank should be sent to the gallows, even if a pig is replaced as the CEO, the performance will be better than him. "

  Li Lu restrained his smile and continued to check the documents.

  JP Morgan, a loss of $166 million.

   Wells Fargo, with a profit of $123 million.

   Bank of America, with a loss of $1.205 billion.

   Wachovia, a loss of $624.5 million.

   "A total of $3.9725 billion in losses on five bank stocks?"

  Buffett nodded to Li Lu, "Yes! If my favorite bank, Wells Fargo, hadn't helped me pull back a round, the loss might have exceeded $4 billion."

   Hearing this, Li Lu felt a little better, and didn't complain about Buffett as much as before.

  Although it was Buffett who encouraged him to invest in the options market, the loss of money cannot be entirely due to others.

   Berkshire Hathaway's losses this time are dozens of times more than Himalayan capital. Buffett should not feel well, so be considerate of each other!

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

   He said, “Wells Fargo stock is doing pretty well, at $14.23, and the option strike price is $15, a loss of $77 million on 100 million options.

   However, due to the $200 million option premium received in advance, after deducting this part of the loss, there was a surplus of $123 million.

   As expected of the stocks that you have always liked and held for 20 years, in the raging storm of the financial crisis, they stayed still! "

   Buffett did not feel complacent because of these remarks, his expression was still heavy, and he said: "We are just lucky, if you look closely, you will find that Wells Fargo's stock price trend is actually not very good.

  If the date of signing this put option is a month or two later in the evening, or a week or two, we may not only be unable to make a profit, but even suffer a serious loss. "

   Speaking of this, Buffett is also heart palpitations. Fortunately, there is a Wells Fargo Bank to cover up the ugly, otherwise this time it is really a complete defeat, and he will be embarrassed if he loses.

  Charlie Munger said at this time: "The 2008 financial report is about to be released, have you thought about how to write a letter to shareholders?

   Berkshire Hathaway has suffered such a severe loss on financial derivatives contracts this time that it is hard to explain the past.

  You've always been against speculation, and now..."

  Charlie Munger spread his hands, thinking about taking care of the partner's face, he didn't say any more, but the meaning was clear enough, the **** of stock may not be stable!

   Buffett frowned and remained silent.

   Last year, he was worth $62 billion, beating Gates, who was worth $58 billion, and has been the richest man for the thirteenth time in a row, and topped Forbes as the world's richest man.

   The richest man in his hand has not yet sat on the throne, and he is about to make a fool of himself.

   Buffett suddenly asked: "You say, who is playing against us?"

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

  Buffett shook his head, "It's not like they did it, they're not so crazy yet."

  Charlie Munger said: "Will it be the shorts who profited from the subprime mortgage crisis last year?"

   Buffett thought for a moment and said, "Forget it, it doesn't matter who it is.

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

  I'm going to buy the dip in US stocks in the near future, Louis, do you want to follow? "

  Li Lu hesitated. In his opinion, Buffett was about to become Barry, and he asked himself if he would follow? What if I step into the pit again?

   Seeing the hesitation on Li Lu's face, Buffett smiled indifferently, "It doesn't matter, you can do more research on the market yourself.

   In short, I think there is very little room for US 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 subject and talked about BYD in China.

In September last year, under the recommendation and introduction of Li Lu, Berkshire Hathaway subscribed for 225 million H shares of BYD at a price of HK$8 per share, accounting for about 10% of the shares after the completion of the placement by YD. 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 Aoguanhai has been busy promoting his green energy plan recently."

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

  Buffett's eyes narrowed slightly, as if he had thought of something in an instant.

  His good friend Gates has been very proud of himself recently. He often mentioned about Daeron to him, and praised how good this great guy is, and will become the next Buffett sooner or later.

   I'm feeling a little uncomfortable, I'll just have a chapter today, and I'll make up for it tomorrow.

   (end of this chapter)