"Extra! Black financial god visits Wall Street for the first time, attempting to negotiate with institutions to postpone transactions!" In November, after Small Swift entered Wall Street, news like this immediately spread. The entire Wall Street was in stitches, eagerly awaiting to see Small Swift's downfall.
Although Small Swift was known as the Black financial god of the United States, he had never had much interaction with the core financial hub of Wall Street. He had never even personally set foot on Wall Street.
That's right, Small Swift had always stayed within his company or attended public events, never truly stepping onto Wall Street's territory.
While it was possible to remotely manage all work without entering Wall Street, it inevitably gave an impression of arrogance, suggesting that Small Swift, at his core, looked down upon Wall Street and the people who worked there.
This undoubtedly made everyone on Wall Street extremely uncomfortable. To be looked down upon by a black man was considered an absurd joke. But there was nothing they could do about it, given his success. Two consecutive funds had made all investors incredibly wealthy, with returns exceeding 100%.
This led many investors who, at heart, disdained Small Swift, especially many large financial institutions on Wall Street, to curse him while simultaneously trying every means to buy more shares of the Western Mustang Fund.
After all, making money was the most important thing; everything else was secondary and could be tolerated.
However, now, Small Swift was forced to set foot on Wall Street's domain. This made many people on Wall Street, who had long felt deeply humiliated, rejoice and prepare to laugh as Small Swift endured further insults.
This was because everyone understood Small Swift's purpose in coming to Wall Street this time: to extend the deadline for his short positions, so that his Western Mustang Fund wouldn't suffer devastating losses.
Thanks to its high profile, all investments by the Western Mustang Fund were closely watched by the industry. Everyone naturally knew about Small Swift's shorting of almost all major mobile phone companies and brands.
Initially, Wall Street was puzzled by this move. They couldn't comprehend Small Swift's strategy, believing that he thought the mobile phone industry would experience significant losses, which was as incredible as predicting that the Chinese team would lose to Vietnam.
Until the emergence of Zhong Mi phones, this confusion turned into ridicule. At that time, stocks of major mobile phone companies soared by 80%, and everyone on Wall Street was convinced that Small Swift was a complete fraud and a guy favored by Lady Luck, otherwise, there was no explaining how he could make such an outlandish move.
But now, many on Wall Street expressed genuine admiration for Small Swift and even acknowledged his capabilities.
After all, the people on Wall Street were not fools; they wouldn't be fooled by the vague quarterly reports from major mobile phone companies.
This tactic of playing with words, turning monthly sales into total quarterly sales, was only effective on those foolish retail investors. These professionals, who dreamed of numbers, could immediately see through the substance of the quarterly reports and thus conclude that the sales of major mobile phone companies must have declined significantly.
Furthermore, because these companies dared not directly release normal data but instead resorted to such tricks, it confirmed that the crisis faced by major mobile phone companies was even more terrifying. It was possible that next quarter's sales would be halved.
Once they understood this, everyone realized how insightful Small Swift had been, foreseeing three months in advance the Chinese mobile phone companies' entry into the US market and the immense impact it would have.
In their view, Small Swift's actions this time once again proved the brilliance of his title, the Black financial god. They felt unqualified to mock such a financial king.
But they still wanted to laugh. Because even if Small Swift was a genius, he would be beaten down this time, as Wall Street institutions would never allow Small Swift to renew his short positions.
Allow me to explain short selling: it involves borrowing stocks from major institutions and converting them into cash in the market. If the stock price plummets by the agreed-upon time, it might be possible to buy the same number of stocks with only 1/10 of the capital, then return them to the institution, along with the borrowed funds. This way, one could earn a 90% profit in a single transaction, which is incredibly formidable. xxs壹贰
However, the term for such short selling is generally not too long, typically around three months, as short selling requires the payment of substantial interest, calculated monthly. The common monthly interest rate in the industry is 2%.
Furthermore, this portion of the funds must be agreed upon for a fixed period and paid in advance.
For instance, if you intend to borrow stocks worth 10 billion, and agree to a three-month borrowing period, you must pay 600 million in interest in advance before you can borrow this amount.
This monthly interest rate is terrifying. Three months amounts to 6%, and a year totals 24%. This interest rate is higher than that of loan sharks.
If the timeframe becomes too long, the interest paid will exceed the profits earned, which is simply outrageous.
Therefore, unless one has absolute confidence in predicting a stock market crash in a short period, no one would voluntarily engage in short selling.
The short positions purchased by Small Swift this time were for a three-month period.
So, with the three-month period having arrived, according to the rules, Small Swift must return the stocks he borrowed, or he will be charged a daily penalty for default.
Once all his margin is deducted, Small Swift will still have to face a court trial. Therefore, at this point, Small Swift has only two options.
One option is to negotiate an extension with these institutions; the other is to repay the money immediately.
But at this moment, the entire Wall Street is aware that those institutions will absolutely not renew with Small Swift. Firstly, Small Swift himself has a terrible reputation on Wall Street, and everyone wants to see this damned black kid fall hard. Hence, they are forcing him to repurchase the stocks at a price 30% higher than his selling cost, incurring a substantial loss and completely ruining his title as the Black financial god.
Secondly, it is rumored that Motorola, Nokia, and other companies are lobbying behind the scenes, leveraging their vast influence to teach Small Swift a lesson.
Finally, and most importantly, countless institutions plan to profit handsomely from this transaction and then make a clean getaway.
As explained in the short-selling process, Small Swift must do everything possible to repurchase the same quantity of stocks he borrowed from the market. This is a massive 40 billion dollars worth of stocks, accounting for about one-tenth of the entire mobile phone market.
In other words, there will inevitably be buy orders worth 40 billion dollars injected into the market. This is a foreseeable future. This buy order itself is the biggest positive factor in the world. Everyone knows that the Western Mustang Fund must buy 40 billion dollars worth of stocks, so who would be willing to sell their shares cheaply at this time?
Therefore, the prices of these stocks are bound to rise.
And this is precisely when the institutions can seize the opportunity to make their exit.
As mentioned earlier, Wall Street people are clearer than anyone. They already understood that those mobile phone companies were reaching their limits. When the annual financial reports were released, stock prices were bound to plummet.
But the problem is that when these mobile phone company stocks were soaring, these Wall Street institutions had taken the opportunity to acquire large quantities of these stocks. As a result, these stocks, bought at high prices, were now stuck in their hands. They dared not sell them. If one institution sold, others would follow suit, causing the stock price to crash and their losses to become immeasurable.
The only way for them to safely withdraw was to have Small Swift's Western Mustang Fund take over. By leveraging the fact that Small Swift must repurchase stocks worth 40 billion dollars, they could sell their overstocked shares to Small Swift, thereby completing their escape.
It's like holding a grenade; if you don't hand it over to Small Swift, the institutions will be the ones blown up.
So, how could these institutions possibly allow Small Swift to extend the deadline? After all, if they extended it by another three months, it would be time for the annual reports to be released.
With the dismal sales data of major mobile phone companies announced, retail investors would inevitably flee, and the stock prices would become impossible to conceal. They had to seize the opportunity while those foolish retail investors still had confidence in the mobile phone companies, and the stock prices remained firm, even rising slightly, to have Small Swift take over.
Therefore, Small Swift would absolutely not be allowed to renew, as it went against the interests of almost the entire Wall Street. Not to mention that given Small Swift's identity, causing trouble for such a universally disliked individual would be the perfect choice.
Thus, as soon as Small Swift arrived on Wall Street, everyone had already condemned him to death.
In reality, Small Swift visited five institutions in one day. The stocks he borrowed were from these five institutions.
When he initially borrowed the stocks, these institutions were all smiles and eager to hand over the shares to Small Swift.
But now, Small Swift couldn't even meet with the top bosses of these institutions. They were either out for meetings or on vacation. Only some mid-level management met with Small Swift and stated that, due to market conditions, there was no possibility of an extension.
Ultimately, Small Swift had to leave Wall Street in a very dishevelled and desperate state, becoming the biggest joke on Wall Street that day, without any exaggeration.