The picture goes back to eight months ago, when Zhong Shi appeared in the American media in a grand manner, and saw this unusually young face, the scar that had healed in Soros's heart began to ache faintly again.

The failure of the attack in Hong Kong eight years ago caused the quantum fund to lose a lot, but the investment is inherently a gain and a loss, which is nothing. The real reason that really discredited Soros and made the macro hedge fund collapse from then on was that there was a serious infighting between the two hedge funds with the most fame, the largest fund management, and the most accurate market predictions in the whole world at that time. Although the rights and wrongs have long passed, the hedge funds that carry out macro strategies and the huge international funds no longer trust these two hedge funds, coupled with the central banks of various countries to increase the monitoring and attention to international funds, making it more and more difficult to short a country's monetary system, so after the outbreak of the financial crisis in some countries in South America in 99, the entire macro strategy of hedge funds has not reappeared at the end of the 20th century.

As one of the representatives of the era of macro strategy, Soros once upon a time could cause huge shocks in the market and even lead to the collapse of a country's monetary system, but after being put on the table by Zhongshi, his unparalleled prestige and market appeal disappeared. Of course, there are also reasons for losses in the Russian government bond market and shorting the yen, but in the final analysis, it is the rumors released by Zhongshi that are more lethal, and the whole market is skeptical. Robertson teamed up to refute the rumors, but to no avail, and even at the strictest of his time, some of his investors expressed doubts about his professional ethics.

This blow to prestige is the most unbearable for Soros. Although everyone knew that making a little off-the-market trick was something that everyone would do secretly, after this layer of window paper was pierced, everyone became the sanctimonious side, and unceremoniously criticized the Quantum Fund and the Tiger Fund.

After the Tiger Fund collapsed due to the high-tech stock bubble, George. Soros has also entered a low-key period, firstly, because of his unsatisfactory performance over the years, and secondly, the new talents on Wall Street are becoming more and more vigorous one by one, and in just a few years, countless young talents have become the focus of the market, and his past of making $1 billion in a single transaction is no longer exclusive to him. Every once in a while, Wall Street is now making a new myth of making $1 billion. From time to time, there are even bigger numbers than that.

Although Soros kept a low profile, he still maintained enough respect for the legendary figure among the top executives of major financial institutions, because in this industry with an extremely short average life expectancy. Quantum funds can survive for decades. There must be something very remarkable about it. Don't say anything else. Just talking about Soros's personal wealth, which has grown up in recent years, you can see how powerful this old guy is.

Once the dark side of the psyche jumps out to haunt you. Soros could no longer sit still. However, after listening to Zhong Shi's interview, he realized that he may no longer be the opponent of this young man, and he must unite one or several super financial institutions to deal a heavy blow to each other. After all, until now, he has only saved a net worth of more than 10 billion US dollars, and the other party was able to come up with such a large amount of money in 98, and now it is naturally not the same.

But in the financial market, it is a difficult thing to set up a trap for the other party, first of all, you have to make the other party interested in a certain market, and secondly, after figuring out the other party's position and operation direction, it is good to prescribe the right medicine, but this information belongs to the other party's top secret, generally speaking, you can't get it at all. The most terrible thing is that, according to what Soros knows, Tianyu Fund is basically not open to external investors, and it has been entrenched in the Hong Kong capital market for a long time, and does not appear in the capital market of the United States, so he has no good way to do it for a while.

After several confidential talks with Stanley's top management, he received the unexpected news that Tianyu Fund was gradually withdrawing from the Hong Kong capital market, which made him ecstatic. If such a large amount of money is cashed out, it is impossible to put the funds in the bank account and fall asleep, because everyone knows that this is the stupidest way to manage money. There are only a handful of markets that can absorb such a large amount of capital, including the American market, the European market and the Japanese market. Taking into account the exchange rate, he believes that the probability of these funds appearing in the US capital market in the form of US dollars is the largest.

Breaking it down, the U.S. stock market, bond market, and even the credit default swap CDS market have enough capacity to absorb these funds, although the foreign exchange market is even larger, but considering the risks involved, Soros does not believe that Zhongshi will invest most of its funds in the foreign exchange market.

At this time, Stanley America also had a serious internal crisis, that is, their traders bought a very large position of CDO, and due to the outbreak of the subprime mortgage crisis, Stanley's purchase of CDO suffered heavy losses.

Why, contrary to hedge funds, would large financial institutions buy such a large number of bonds with low-grade mortgages? There is a lot of article in this.

Generally speaking, large financial institutions, especially investment banks, have three core businesses, the first is naturally investment banking business, practitioners are generally called bankers, they are well-dressed, personable, and everywhere they go are dressed as successful people. The profits earned by these people are commissions for operating the company's listing/additional issuance/bond issuance, etc. Different from the investment banking business, large investment banks also have another profit point, that is, proprietary business, generally speaking, FICC (foreign exchange, bonds, commodities, etc.), which is operated by the traders of the investment bank, using the investment bank's own funds to buy and sell various targets in the market, earning a small difference, and in the case of a large amount of money, these profits together are considerable, and in some cases are not lost to the profits earned by the investment banking business.

Before the rise of private wealth management, investment banks on Wall Street generally relied on these two profit points to support. The rise of hedge funds made investment banks realize the huge profits in this area, and private wealth management came into being. And soon became the third fulcrum of investment banking profits. However, due to the fact that it is too early to compete with the other two departments in a short period of time, generally speaking, in Wall Street culture, the sales and trading department and the investment banking department are still the key profit departments.

The sales and trading department of the top investment bank, sometimes the performance is quite terrifying, although sometimes there are hundreds of traders operating in the market at the same time, but if the risk control mechanism is good, many times the trading department of the investment bank is profitable most of the time, and even in the trading days of a year, some investment banks can control the loss days in about ten days. This number is quite staggering.

But anyway. There is still a big difference between an investment bank's proprietary business and a hedge fund, although at some point they trade exactly the same undertake. First of all, the traders of the investment banks use the company's own funds, although the risk control mechanism is good. But after all, it's not a panacea. And because it is not using its own funds. Traders basically buy and sell as much as they want, and the remuneration they receive is a sharing mechanism, so what they pursue is to maximize profits.

Secondly. As a market maker in the ABX index, investment banks buy and sell many mortgage-backed bonds every day, while matching quotes between buyers and sellers. Therefore, the amount of bonds flowing in and out of their accounts every day is also extremely large, and if there is any turmoil in the market, the CDO market that only buys but does not sell may immediately have a lack of liquidity, and market makers with large positions may not be able to sell bonds, in which case they have to bear the risk brought by any market.

Unfortunately, as an investment bank with a large proprietary business and a market maker for the ABX index, Stanley America is caught in such a crisis.

Traders at Stanley bought a large number of BBB-rated and lower-rated mortgage bonds because they were so high yields that they would pay for themselves if they were paid normally or even only partially. Unfortunately, after the collapse of New Century Finance, HSBC also announced the dismissal of all employees in charge of home mortgages in the United States, which ignited the panic in the market to the extreme.

The market panicked, many traders were scrambling to sell off their subprime bonds, even the better-rated ones, and Stanley, one of the largest market makers, amassed huge lots of mortgage-backed bonds all at once, while their traders could only market these bonds all over the world, including public funds and foreign banks. But at this time, others are not stupid, and will only buy those mortgage-backed bonds with good ratings, and dare not buy those subordinated bonds with poor ratings.

Stanley, who holds a huge subprime mortgage bond, can only pinch his nose and admit it, in addition to diligently selling these subprime bonds every day, he also tries to hide the news from the outside world, because if the news spreads, their stock price will be affected, which will make their situation even more difficult.

After Stanley's high-level sales to the Quantum Fund failed to sell a part of the CDO, Soros soon learned the news, and he who wanted to take revenge on Zhongshi naturally would not let go of this good opportunity, after conspiring with Stanley's high-level executives, the two sides quickly reached an agreement, and a conspiracy against the Tianyu Fund began.

In '98, Stanley, as a top investment bank, was deeply involved in the plan to short Hong Kong. Naturally, they, like the Quantum Fund, only ended up in disgrace. However, unlike the tourists, Hong Kong is an important international financial center after all, so in the whole plan, Stanley only played the role of waving the flag and drawing salaries.

And most importantly, even if the Stanley top management at that time seriously offended all walks of life in Hong Kong, they only needed to fire this group of people and replace them with a new group of people to mend the corresponding relationship. In this regard, hedge funds are far inferior to investment banks, after all, it is impossible for quantum funds to fire Soros himself.

First of all, Stanley Hong Kong came forward to expose Zhong Shi's family background, and pointed out the fact that the other party was reducing its holdings, which caused turmoil in the entire Hong Kong capital market for a while. The motivation for this is, of course, not to let this part of the money flow back. Although they had also thought that this part of Zhongshi's funds did not plan to flow back.

After cutting off the other party's back road, Stanley's next step is naturally to fire the group of people at that time, in order to maintain the relevant relationship, these people can only be regarded as victims. After re-establishing relations with Zhongshi, they threw out an olive branch.

At this time, Greenspan made a timely speech on the subprime bond market, which made them feel that this time there was a good chance of getting rid of the burden (leading the other party into the game). (To be continued......)

PS: Thank you very much for a bowl of Lantern Festival from Uncle I! Tomorrow is the Lantern Festival, I wish you all a happy holiday in advance!