Vol 2 Chapter 3: Stupid or stupid

"Pop, pop, pop—"
Manhattan, Wall Street.
At three o'clock in the morning EST, the sound of leather shoes colliding with the marble floor sounded in the corridor on the top floor of the Morgan Building.
In the dead of night, the sound was very loud in the empty corridor, the sound was very rapid, and the frequency was very uneven, indicating that the owner of the leather shoe was emotionally unstable and excited. Evening was a break time, but the owner of the leather shoes walked in a hurry, indicating that he must have been waiting for news that made him mood swings, and this news could only come from the other side of the ocean.
The fact is also true. For this news from Neon, Anthony Guardian and many colleagues have waited for four years.
In November 1988, the neon stock market tripled in five years. According to Pe calculations, Anthony Guard, the head of the investment department of Morgan Stanley, believes that the neon stock market is still peaking.
Anthony Guardian has good reasons.
The logic of the neon stock market’s rise is an important one based on the form of neon merchandise’s global aggression. With low prices, neon’s cars, refrigerators, air conditioners and even daily necessities can be found everywhere in the world. Exaggerated words can explain everything, as long as there are people, there are neon goods.
Because of the abnormal flooding of the yen, the value of the yen has always maintained a very low exchange rate. Therefore, the neon stock market will advance all the way.
But all this started the rest in 1985.
In 1985, the European and American economies were once dragged into the abyss due to the Cold War. Coupled with the impact of neon products’ cheap prices, the economies of all countries have worsened. In order to curb the crazy aggression of neon, the Neon Cabinet has been in the square with the four countries under continuous pressure. The hotel signed an agreement to depreciate the dollar.
In two years, under the leadership of various countries, the U.S. dollar began to depreciate and the yen appreciated rapidly.
In 1987, due to the rapid depreciation of the U.S. dollar leading to instability in the global exchange rate, the finance ministers of the seven countries and the governors of the central bank reached an agreement at the Louvre in Paris to take joint measures to prevent the decline in the value of the U.S. dollar and maintain the basic stability of the U.S. dollar exchange rate.
As a result, the yen has appreciated rapidly again, from 420 to 210, and the accumulated appreciation has doubled. This means that the price of settlement neon goods in global US dollars has doubled. Prices increase and sales will inevitably decline, but for neon's local manufacturing industry, profits have not increased. From the data at the time, in recent years, the neon trade surplus has reversed, and the stock market is also thousands of times Pe.
Anthony Guardian believes that Neon's stock price is still peaking.
His judgment and reasoning have been supported and recognized by most of his peers. After many investigations and discussions, he has formulated a perfect short-sale plan, stock index put options.
The so-called stock index options are derivative financial products based on standardized stock index contracts.
The option buyer pays the option seller a premium to obtain the option to buy or sell a certain stock index contract at a certain price level, that is, the stock index level, at a certain time in the future or before that time.
Theoretically speaking, the profit of the subscribing party is unlimited. When the market moves in the direction of the buyer's subscription, unlimited profits can be obtained, while the seller's income is limited. The maximum profit is the royalties paid by the buyer when the purchase direction is wrong.
Yes, it looks like this is a stupid investment.
Assuming that the premium of the call option is one dollar, then theoretically the seller's maximum profit is one dollar, while the buyer's maximum profit is theoretically unlimited.
Isn't it stupid?
Maybe it is really stupid.
Because there is a belief in Neon, which is almost religiously persistent, it is impossible to make the stock market go down. In 1987, Neon could support the global financial market. Nothing can prevent Neon’s stock price from going up 100,000. turn off. They feel that there is a very special thing in their market, in the whole nation. This special thing can make neon go against all the laws that exist in all parts of the world.
This is a kind of intoxicating neon dream. In the pursuit of all Neon falling into the 100,000-point mark, Morgan Stanley, together with Solomon Brothers, and a group of investment banks entered Neon to find major insurance companies in Neon Companies, and touted their new product, stock index call options.
Even in order to increase the credibility of this stock index call option, the major investment banks went through the hands of the king of Denmark to ensure its gold content and credibility.
As a result, it is naturally a big seller.
In the words of the former Prime Minister of Neon, Americans are inferior nations and extremely stupid.
From the perspective of neon's major insurance companies, there is no more foolish investment than peddling stock index put options.
The stock market goes up and gives one hundred, and the stock market goes down and loses one piece.
Such a stupid business, it is natural to buy.
Then...Neon's major insurance companies bought stock index stock options launched by Morgan and Salomon, and the major Neon funds and trust companies also bought a huge amount of stock index call options.
The reasons are not the same. From the perspective of major insurance companies, this is a profitable and profitable transaction. For major public funds and trust companies, this is a good financial product hedging tool. When the stock market rises, the stock positions held by trust institutions and funds can bring income. If the stocks fall, the stock index put options purchased will be executed, and the profits of major foreign investment banks can be compensated.
It turns out that this is indeed a very stupid investment.
Anthony Guardian, Morgan Stanley executives, Salomon Brothers, and many colleagues did not expect that the horror of neon has gone beyond normal economic theory. In the torment of waiting, Salomon Brothers unfortunately reached the brink of bankruptcy in 1990.
Because of the wrong risk prediction, the stock index call options sold by Salomon Brothers were beyond the company's ability to bear. The loss was as high as 10 billion U.S. dollars and could only be acquired by the Traveller Group.
In the mid-1980s, it became a giant on Wall Street and an empire in the financial world. No one thought that Salomon Brothers would sink in the neon fold. Worse still, it would sink before dawn.
Loss is suffering. UU reading www.uukａnshu.com
Over the past four years, Anthony Guardian has suffered so much in his peers who have closed down or been annexed because of market risks.
Now, four years of waiting has finally reached the moment of victory in receiving the goods.
"Pop, pop, pop—"
Anthony Guardian stepped excitedly and stopped at the door of the president's office.
The lights are still on in the office.
Who would have thought that in the eyes of outsiders, Wall Street represents extravagance, money, and depravity. Overtime can only be regarded as a daily routine. It is common to stay overnight or even 72 hours of sleep.
Knocking on the office door, Anthony Guardian straightened his collar and walked in.
"James, news from neon."