"Since house prices will continue to fall, we will sell the house now, rent it, and then take the cash and wait for the bottom, so that we will not make money?"

Zhang Wenwu eagerly put forward his opinion.

Ren Pingsheng smiled and didn't say anything, just looked at Jiang Qiurong.

Jiang Qiurong showed a "you are so stupid" expression on her face, rolled her eyes, and said:

"Buying and selling a house is the least cost-effective way to buy or sell a house. If the house price falls by 20%, if you buy it back, you may only gain 15% with the transaction fee, and if the house price rises by 20%, you will buy it back, and you will lose more than 25% with the transaction fee, which is obviously not a good business. In addition, the trend of real estate takes a long period to appear, and there are many restrictions on realizability in the market, which can only be used to maintain value, and there is no arbitrage. “

Although Zhang Wenwu was reprimanded by Jiang Qiurong, his enthusiasm was not frustrated, and continued:

"Then we short the real estate companies and related financial institutions of the US stocks, can't we arbitrage?"

Jiang Qiurong was quite acceptable to his speech this time, but she continued to shake her head and said:

"The risk of shorting is very high, and the scope of subprime lending is very large, almost all investment banks and financial institutions are involved, you have to face the whole Wall Street, if they join forces, you will be eaten alive, and the risk and return are not proportional. ”

Ren Pingsheng nodded approvingly and said:

"That's why George Soros and other financial giants are short the pound, the ruble, and emerging markets, but they never dare to short the United States, not because the U.S. economy has no shortcomings, but because Wall Street is too powerful, from rule-making to tool design to capital raising, the entire financial market is controlled by Wall Street, such an opponent, even if you find their loopholes, they have enough wisdom and ability to cover up this loophole, and even use loopholes to their own benefit. ”

The more Zhang Wenwu listened, the more frustrated he became, and he said with a depressed face:

"Wall Street is so strong, so what's the use of knowing so much, and we still can't make money from this crisis. ”

Jiang Qiurong also had this question in her heart, but her confidence in Ren Pingsheng was obviously more than Zhang Wenwu, she didn't speak at this time, but just looked at Ren Pingsheng quietly with that pair of phoenix eyes, waiting for his next words.

"If Wall Street hadn't developed this derivative tool, we wouldn't have been able to do anything. ”

Ren Pingsheng was in the eyes of the two, and said quietly:

"However, I've found the best tool for shorting, and that's CDS. ”

Zhang Wenwu, the first brother of the financial market, did not understand as usual, and he immediately asked:

"What is CDS?"

Jiang Qiurong showed a thoughtful expression and said slowly:

"CDS, Credit Default Swap, is a standardized credit default swap contract created by ISDA (International Swaps and Derivatives Association) in 1998. A CDS is essentially a default insurance contract, which protects the risk of the loss of the bonds you hold by the financial institutions that sold the CDS, which can be banks or insurance companies. “

The concept of CDS is more esoteric than that of CDO, and seeing Zhang Wenwu's bewildered look, Jiang Qiurong took the trouble to explain:

"To use the most popular analogy, you lend me 100 yuan, and then you pay 10 yuan to the insurance company to sign an agreement, if I give you back 100 yuan, then the insurance company makes 10 yuan, and if I can't pay it back, the insurance company will pay you 100 yuan. ”

Ren Pingsheng added:

"That's right, CDS is a market that has arisen due to the growth of CDOs. Although many investors have bought CDO based on the rating of rating agencies, they are still not at ease about the risk of funds, and at this time, there is a demand for value preservation, which is realized by CDS. With a CDS, the CDO investor pays a "premium" to the insurance company every quarter, and if the CDO is at risk, the insurance company will pay a certain amount of losses to the purchaser of the CDS. “

"With CDS, the risk of buying a CDO is further diversified. CDS provides insurance not only for investors in general, but also for hedge funds and investment banks that rely on CDOs for collateralized financing. When investment banks saw that the risk of subprime mortgages had been minimized through various derivatives, they were relieved to continue to increase their leverage, further transmitting the risk to financial institutions that provide CDS insurance. “

Zhang Wenwu hadn't seen the trick yet, and he asked:

"Since Wall Street has controlled the risk of derivatives so carefully, what do we use to short it?"

Before Ren Pingsheng could speak, Jiang Qiurong had already thought of it, and she blurted out.

"CDS can be traded naked. ”

Hearing this, Ren Pingsheng immediately showed a satisfied smile on his face, and he gently raised his chin to Jiang Qiurong.

After all, Jiang Qiurong graduated from a bachelor's degree, although she does not have the information reserve of Ren Pingsheng, who is a reborn person looking at the overall situation, but she can rely on her profound financial knowledge and front-line work experience to deduce the real answer to the question under Ren Pingsheng's step-by-step guidance.

At this time, Jiang Qiurong couldn't care about turning the pen in her hand, her five slender white fingers held the pen tightly, tried her best to restrain her excitement, and said in an extremely calm tone:

"CDS looks like insurance, but it's not the same as insurance. Its earliest purpose is to avoid capital requirements, which is equivalent to using derivatives to improve the efficiency of capital use, so the biggest difference between CDS and traditional insurance policies is that it has no specific insured subject. “

"In traditional insurance, you need to own what is insured, that is, the subject matter of insurance. Life insurance, for example, guarantees your life. Fire insurance is your property. You can't buy car theft insurance without a car or earthquake insurance without a home. “

"But CDS is different. If you don't own a corporate bond, you can also buy a CDS of the corporate bond and pay a premium to the CDS seller. When the company's bonds default, the CDS seller must pay your losses as if you were holding the bonds. “

In order to strengthen her persuasiveness, Jiang Qiurong raised the pen in her hand and pointed at Zhang Wenwu and said:

"Taking traditional life insurance as an example, each of us can buy one or more life insurance policies for ourselves, the subject matter is our life, but we cannot buy life insurance for the lives of others. CDS is different, people who have nothing to do with you can also buy you life insurance, because I think the nature of your work is dangerous, and once you hang up, I can get compensation. “

Zhang Wenwu was frightened by Jiang Qiurong's fingers, and he cried and said:

The essence of insurance is to compensate for the misfortune of a few people with the luck of the many, and the vast majority of people who buy insurance are not willing to lose their own losses and get claims. However, the purchaser of the CDS has no interest in the target holder, so doesn't the purchaser want the target holder to suffer losses? Because the loss of the target holder has nothing to do with the purchaser of the CDS, but the insurance claims all belong to the purchaser. ”

Jiang Qiurong saw that Zhang Wenwu had finally opened her mind, and her marble-like cold jade face was finally thawed, and she smiled and said:

"That's right, the essence of CDS is to base happiness on the pain of others. If you go bankrupt, I will make a profit, if you lose, I will gain, and if you die, I will collect the money. ”

Although Jiang Qiurong's smile was full of charm, the cold rationality in her words made Zhang Wenwu shudder, he shrunk his neck, muttered something in his mouth, but didn't dare to speak again.

But Ren Pingsheng looked at the "female devil" in front of him with appreciation, and added with a smile:

"Since the purchaser of CDS is not required to be a stakeholder, the quantity of CDS is not bound by the target quantity, and it can be supplied in unlimited quantities as long as someone is willing to buy it.

"Although veteran market participants can see through the essence of CDS, in the context of a boom in the real estate market, MBS\\CDO has given rise to unlimited demand for CDS, so financial institutions are desperately selling CDS to earn huge premium income. ”

Ren Pingsheng stopped tapping his fingers on the table at this time, he put his hands on the table, and said very calmly:

"Although the original intention of CDS is to protect the value of the purchaser, its characteristics determine that the purchaser can buy CDS without restrictions, as long as the subprime mortgage caused by the real estate market crash, these financial institutions that sell CDS have to pay hundreds of millions of premiums, this is the best short tool. ”

Jiang Qiurong and Zhang Wenwu both raised their heads in unison and looked at Ren Pingsheng's eyes.

In addition to worship, it is still worship.