After Ren Pingsheng's three-person group in New York had a meeting, Ren and Jiang returned to Jiang Qiurong's bachelor apartment in Manhattan.

The apartment near the central apartment is only 100 square meters in size, but the monthly rent reaches 5,000 US dollars, fortunately all this is paid for by Hanhai Bank, otherwise Jiang Qiurong's income level is a little unbearable.

Although the apartment is small, the location and property services are top-notch, so after Jiang Qiurong settled in New York, she regarded this place as a long-term stay. With her high standard of living, it is natural that the interior is very comfortable.

The apartment types of this kind of apartments in the United States are all one living room and one room, so at this moment, Ren Pingsheng is lying on Jiang Qiurong's simple bed full of modern style, looking at Jiang Qiurong who is busy sitting in front of the Bloomberg terminal in the bedroom.

The Bloomberg terminal is a computer system that gives professionals access to the Bloomberg Professional Service. Bloomberg Professional Services allows users to access and analyze real-time financial market data and conduct financial transactions.

Founded in 1981 by Michael Rubens Bloomberg, Bloomberg Professional Services is a professional financial service developed by Bloomberg (commonly known as Bloomberg) to provide clients with timely quotes, data, news, analysis and research, and trading information in the global financial markets.

The Bloomberg terminal is the core product that carries Bloomberg Financial data services. Whether in securities trading institutions, commercial and investment banks, or even in national financial regulators, Bloomberg terminals are extremely common. Its clients include analysts, traders, investment managers, etc. in the financial industry, who obtain real-time financial market transaction data, analysis and various industry information through this product to determine the next investment and trading direction.

At present, Bloomberg is the world's largest financial data service giant, and the Bloomberg terminal is also an essential information tool for Wall Street investment banks.

Jiang Qiurong is a woman who strives for perfection in her profession, so she does not relax the acquisition and absorption of financial information at all, so in her most private bedroom, in addition to those well-cut high-end clothes and big-name cosmetics, there is also a Bloomberg machine that can check the latest information at any time.

You're right, CDS is indeed the best tool for shorting. ”

Jiang Qiurong stared at the information on the Bloomberg plane with her eyes firmly fixed on it, and did not look back.

"There have been a lot of people who have been ahead of the curve, Scion Capital bought $1 billion in CDS, Deutsche Bank bought $5 billion, FrontPoint Partners LLC bought $3 billion, Highside Capital bought $2 billion, Harbinger Capital bought $7 billion, do you know who bought the most?"

Ren Pingsheng replied without hesitation:

Paulson Fund. ”

This time Jiang Qiurong finally turned around, and she asked with a look of surprise:

"How do you know?"

Ren Pingsheng smiled and said nothing, of course he knew the deeds of John Paulson, the famous "Wall Street Short" in later generations.

In the midst of a series of crises in 2007-2008, the Paulson Fund emerged as the biggest winner in the subprime mortgage crisis. In 2007, the Paulson Fund earned $12 billion on shorting subprime loans using CDS, and in 2008, the Paulson Fund earned another $8 billion on shorting banks. The Paulson Fund became one of the world's largest hedge funds in just two years, and Paulson also surpassed financial tycoons George Soros and James Simmons to become the "first hedge fund."

But at this point in time, the Paulson Fund and Paulson's name are not prominent enough, and the public does not know much about this "big short" except for veteran Wall Street investment banks and hedge funds.

The reason why Ren Pingsheng was able to understand so much was mainly because he had carefully read a series of relevant studies and books on the subprime mortgage crisis in his previous life, so he knew the winners in the subprime mortgage crisis well, and he also had a good understanding of the methods of these winners.

Ren Pingsheng's pretending posture Jiang Qiurong is already very familiar, since this man doesn't talk about it, there must be his reasons, Jiang Qiurong is not a woman who has to break the casserole in everything and ask to the end, she knows when to leave some secrets for men, and it is not good to blindly ask.

So Ren Pingsheng didn't say it, and Jiang Qiurong didn't continue to ask, but turned to the topic she was more concerned about.

"Since you've been researching subprime mortgages and CDS for a long time, why don't you buy it sooner, isn't it a little late?"

Ren Pingsheng smiled bitterly, Jiang Qiurong's words hit his heart.

He has been following the changes in the U.S. market since his rebirth, and of course he knows that the past two years are the best opportunity to use CDS to short the subprime mortgage market, but it's one thing to want to get it, it's one thing to know how to operate, and it's another thing to be able to really put ideas and operations into practice.

In 2006, when Ren was just reborn, Scion Capital had already begun to buy CDS, and the Paulson Fund discovered the mystery of CDS and began to raise funds from investors, but it was not until the end of 2006 that the Paulson Fund raised a total of $2 billion before it began to build a position in CDS.

These funds that use CDS to short subprime loans are large and small, but the smallest ones are more than $1 billion. At that time, Ren Pingsheng was still working hard to open up the Mekong River route, and only earned the first 10 million in his life through Indian generic drugs, and he couldn't even get a ticket to Wall Street, so why should he do a short subprime loan.

Even in 2007, Ren Pingsheng raised his net worth and capital to the level of hundreds of millions, but there is still a big gap from the size of Wall Street hedge funds, not to mention that the vast majority of his assets are in China.

But now it is different, Ren Pingsheng has cashed out more than $1.3 billion in cash through the financing and listing of Universal Games, plus the net profit of $20 million from selling Apple shares this year, and he has $1.4 billion in capital in the hands of King's Landing Capital LLC, a U.S.-registered entity, which has reached the basic threshold of Wall Street hedge funds.

On the other hand, Ren Pingsheng made friends with Wall Street investment banks such as Goldman Sachs and Morgan Stanley through the listing of Universal Games, and established stable credit with them, which also provided him with a way to participate in financial derivatives trading.

The last and most important one, Ren Pingsheng entered the game at this time, just to avoid the short squeeze between Wall Street giants.

The so-called short squeeze refers to the behavior of a group with strong manipulation ability in the securities market to absorb and concentrate the securities circulating in the market with large funds, or to raise the current price by buying a large number of them, so that the short sellers in the market only need to buy long and hedge at the same time in order to make up for the losses, which eventually causes the stock price to rise sharply. For short sellers, short squeezing is the most terrible situation, and short sellers facing short squeezing, unless the short squeeze party releases a way out, the short seller will definitely go bankrupt and die out.

However, an object with a very large momentum needs to go through very fierce resistance to change the original trend, and it takes longer to turn around. In the year-long period between 2006 when the CDS bet began and the crisis erupted, mortgage defaults had risen dramatically, housing prices had begun to turn around, but the bears still couldn't make money because the system was still making its last standing.

Wall Street has never been a paper tiger, those who have placed heavy bets on the CDO Goldman Sachs, Merrill Lynch, Lehman, Bear Stearns and other giants will not be tied up, Wall Street has been firmly bound by MBS and CDO, including investment banks, insurance companies, hedge funds and rating agencies have become a combination of interests, under the background music of "house prices will rise forever", they will use their influence and financial advantages to resist stubbornly, this resistance is so strong that many people involved in short selling began to doubt themselves," Am I wrong? Does the market know something that we don't know?"

When everyone has placed heavy bets on CDS, all that's left is waiting and suffering. These sufferings are caused by the consistently strong prices of CDOs and the increasing pressure on financing costs. This small group of people is by no means waiting for the lupine to disappear every day, and the opponents they face are essentially incomparably powerful machines such as governments, banks, the Federal Reserve, and rating agencies, and they never know what the opponents can do.

In the case of Scion Capital, which was the first to short subprime loans, it continued to reduce its valuable CDS position under pressure from the market and customers before the bubble burst, and in the end, Scion Capital, which was the first to start, only gained 489.34% of the total return.

In the process, the Paulson Fund, which has the most financial strength and patience, has the last laugh, surviving the most difficult stage and waiting for the bursting of the subprime mortgage bubble to win the richest prize, including more than $20 billion.

After listening to Ren Pingsheng's analysis, Jiang Qiurong's eyes were full of admiration when she looked at this man.

This man, not only has a forward-looking market vision and a strong ability to act, but also has a thoughtful heart, and his plan for shorting subprime loans is no less than that of the most sophisticated hedge fund heads on Wall Street.

However, Jiang Qiurong was also vaguely worried, after all, Ren Pingsheng's opponent this time was not an ordinary person, but the entire Wall Street. According to Bloomberg, 13,675 hedge funds and thousands of other types of investment institutions have been licensed to invest in CDS, but even at a time when the risk of subprime loans has been exposed, only 100 institutions have set foot in CDS, most of which are for hedging their real estate.

Only a very small number of people, greater than 10, less than 20, directly naked the collapse of the real estate market, Ren Pingsheng to join this small number of ranks, has to face the huge 100 times opponents, even if he has fully estimated the possible risks, and reduced the risk to the lowest point, but the market is difficult to predict after all, no one dares to assert the future direction.

Is Ren Pingsheng's bet worth it?