Golden Spoon Investment Portfolio - Chapter 33

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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33. Why wouldn’t I go when there’s a party to attend?

Manhattan, New York, USA.
On one side of Manhattan, where towering skyscrapers stood in dense rows reaching toward the heavens.
The Eldorado Fund office was located on the 31st floor of One New York Plaza Building, a landmark that stood majestically with the blue East River at its side.
As I entered wearing a neat knit turtleneck and a long coat, my eyes fell upon the trading floor—a massive market ticker board mounted on one wall and roughly a dozen traders moving about with frantic energy.

Ring, ring, ring!
“Buy two thousand shares of Exxon at limit!”
“Okay, I’ll confirm and call you back.”
“What’s USX Corporation trading at right now?”
“Hold! Hold!”

The cascade of numbers pouring from multiple monitors crowding the desks and the incessant ringing of telephones that never paused for breath evoked the atmosphere of a battlefield, brimming with vitality and energy.
Watching the traders seated at their stations with eyes fixed on monitors or receivers pressed to their ears as they placed orders, I felt my chest grow warm, a surge of adrenaline coursing through my veins.

“Magnificent.”

Above all, the fact that this place—where gladiators rose above the Colosseum to wage fierce battles—belonged to me sent a thrilling rush through my entire being.

“Welcome.”

Just then, Landon Shore, dressed in a gray suit, approached with a smile.

“It’s quite lively.”

I replied without tearing my gaze from the trading floor.
Landon Shore then came to stand beside me, taking in the sight of the traders moving actively as they continued their transactions.

“Indeed. While it can be chaotic, whenever I come out here and observe, the intense heat and dynamism the traders radiate inevitably sets my blood ablaze.”

I gave a small nod, understanding exactly what he meant.

“Shall we head inside?”

Upon hearing Landon Shore’s words, he turned and made his way to his private office, which had been prepared separately.
Though it had remained unoccupied during his absence, meticulous maintenance had kept it immaculate—through the expansive floor-to-ceiling windows, the verdant East River and Ferry Terminal stretched out in a breathtaking vista below.
After a cursory glance around the space, I settled naturally into the principal seat of the reception set positioned to one side.
The large, comfortable sofa seemed tailored precisely to my frame, embracing me with perfect ergonomic fit.
As Landon Shore took his seat to the right, a slender Caucasian woman with dark hair, dressed in a two-piece suit, knocked and entered.
It was Daisy, who handled secretarial duties.

“Andrew has arrived.”
“Please send him in.”

As Daisy stepped aside, Andrew entered, dressed in formal trousers, a white dress shirt, and a beige suspender.
Rising from my seat, I extended my hand first to Andrew as he approached, speaking with evident warmth.

“I hope I haven’t called you away from pressing matters.”
“Not at all. No matter how busy things get, when the boss calls, one must make an appearance.”

Andrew’s demeanor toward me had softened considerably.
He had known that I’d reaped substantial profits from the pound short-betting strategy, yet he’d privately attributed it more to fortune than genuine acumen.
That assessment had shifted dramatically once we began the NCR transaction.
Though the deal remained incomplete, witnessing my exceptional judgment and perspicacity had convinced Andrew that it was skill, not mere luck, that had driven my success.

“What beverage may I bring you?”
“Coffee, please.”
“And for you both?”
“Let’s all have coffee.”
“Strong, without sugar, for me.”

At Andrew’s addition, Daisy nodded and departed.
Seated across from Landon Shore, Andrew extended the thin folder he’d been carrying at his side since entering, presenting it to me.

“What is this?”
“A performance report from this past week, since we commenced our first transaction of the year.”

Separate from the one billion dollars deployed for NCR stock accumulation, I had secured an additional hundred million dollars using my position at Salomon Brothers as collateral, enabling Andrew and the trading team to invest autonomously.
I accepted the folder and opened it, methodically reviewing the performance report within.

“An 8.8% return rate—not bad at all.”

Considering the Federal Reserve’s current benchmark rate of 3%, it wasn’t spectacular, but it was still a solid performance above average.
Andrew shrugged at my assessment.

“Compared to the boss, who generated over 54% returns in a single move through NCR share accumulation, this is rather embarrassing.”

He closed the folder and set it on the table before him, then leaned back in his chair as he spoke.

“The FTC review is still ongoing, so these aren’t confirmed profits yet.”

The Federal Trade Commission, an agency directly under the President, regulated monopolies and unfair trade practices.
One of its primary functions was the pre-review of mergers and acquisitions between companies.
Andrew, his hair neatly combed back, flashed a knowing smile and continued.

“There was initial skepticism, but it subsided quickly. More importantly, the FTC review is proceeding smoothly, so approval is merely a matter of time, wouldn’t you say?”

Landon Shore, seated across from me, chimed in with his own thoughts.

“I share the same view. If there were any issues, the FTC would have signaled something by now.”
“Exactly. You can predict the outcome just by looking at NCR’s recent stock performance.”

After a sharp spike followed by a collapse, NCR’s stock had rebounded as the likelihood of the M&A succeeding grew, now hovering around the acquisition price of $105 per share.

“Since we’re on the subject, when do you think the FTC decision will come through?”

Landon Shore answered my question immediately.

“Barring any unforeseen complications, the decision should come by March at the latest.”
“Good—at least it won’t drag on.”

Just then, Daisy knocked and entered, setting down three coffee cups on a tray before us, then left again.
I picked up my cup and took a sip, the rich aroma of the beans rising from the dark brew.
I hadn’t expected much, but Daisy’s coffee-making skills were surprisingly refined, and my eyes crinkled with quiet satisfaction.

“Well then, I should start preparing for the next investment opportunity.”

Andrew’s eyes gleamed behind his gold-rimmed glasses as he asked.

“Do you already have a target investment in mind?”

Landon also looked at him with an expectant gaze.
Leaning back against the sofa, I drew a meaningful smile across my lips before answering.

“I’ve been developing an interest in Spanish and Italian bonds lately.”

The somewhat abrupt remark caused both men to furrow their brows simultaneously.

“Bonds, you say?”
“That’s right.”
“Why all of a sudden….”

At that moment, Andrew, who had been sitting across from me, recalled something and looked my way.

“Are you perhaps targeting the interest rate spread between short and long-term bonds, like Mundell Partners does?”
“Exactly.”

Mundell Partners was, true to its name, a hedge fund established by the renowned investor Mundell.
It was a considerably old fund, created in 1979, and specialized primarily in bond trading.

“Now that you mention it, I’ve also heard that Mundell Partners has made considerable profits from bond trading.”

Landon’s head snapped up as if remembering something.

“From what I hear, their returns have been quite substantial.”
“They achieved a 48% return after deducting fees last year alone, which became a hot topic for a while.”

As Andrew added his explanation, Landon let out a low whistle.

“Wow, is that really true? I understand the fund operates at a scale of tens of billions of dollars, so 48% is no wonder it became the talk of the town.”

As Landon expressed his amazement with an exaggerated gesture, I spoke calmly.

“When the government—or rather, the Federal Reserve—is practically stuffing dollars into everyone’s pockets, how could they not make money?”

The method by which Mundell Partners generated profits was remarkably straightforward.
When the savings and loan crisis triggered a recession, the Federal Reserve hastily slashed the benchmark interest rate dramatically in response, and Mundell Partners easily borrowed massive amounts of short-term capital at dirt-cheap rates.
With the funds they secured, they accumulated large quantities of high-yield long-term bonds and pocketed the interest rate spread.

‘Purchase 100 million dollars in long-term bonds and even a 2% profit margin nets 2 million dollars.’

Mundell Partners didn’t stop there. They secured loans using the bonds they’d acquired as collateral, then reinvested those funds into long-term bonds—an infinite cycle that maximized their leverage to extraordinary levels.

‘Leveraged investing is practically the default strategy on Wall Street, isn’t it?’

When the Federal Reserve slashed interest rates to prevent the economy from plunging into severe recession, the yield curve widened, and the long-term bonds they held appreciated in value, allowing them to pocket capital gains on top of everything else.

‘They literally had their cake and ate it too.’

As a result, Mundell Partners had been posting record returns over the past few years and throwing lavish bonus celebrations.

“Other hedge funds are following Mundell Partners into bond investments and making considerable profits. We can’t afford to sit this one out, can we?”

Andrew adjusted his wire-rimmed glasses with habitual precision before speaking carefully.

“Mundell Partners’ returns are certainly remarkable, but fundamentally they’re profiting from the yield curve spread. That means we’d need to deploy capital above a certain threshold to generate satisfactory returns.”
“Exactly. Even with leverage, we need substantial capital to truly amplify our profits.”

I rested my chin in my hand, thinking for a moment, then spoke decisively.

“Would three billion dollars suffice?”
“Pardon?”

Both Andrew and Landon Shore’s eyes widened in shock at the staggering figure.
Landon quickly collected himself, leaning forward in his seat as he asked.

“Where are you planning to source that much capital?”

I answered casually.

“The FTSE 100 index position I held in London has appreciated sufficiently, so I’ve decided to liquidate it.”

Understanding the source of the funds, Landon Shore nodded in comprehension.

“I see. The FTSE 100 has indeed risen considerably.”

Following my bets on sterling and the FTSE 100 index, I’d managed to secure an additional 30.1% return.
From just two investments executed in Britain over such a short timeframe, my capital had grown several-fold to 570 million dollars.

“I’ve arranged a ten-fold leverage agreement with Salomon Brothers using 300 million dollars as collateral, excluding the capital tied up in the NCR equity acquisition.”

Andrew flashed a bright smile, his white teeth gleaming.

“That should be more than sufficient to achieve a satisfactory rate of return.”
“Excellent. We agreed to open a trading account within the next week, so let’s coordinate with Salomon Brothers and move forward with the transactions.”
“Understood.”

Landon Shore interjected with a puzzled expression.

“But boss, why are you looking to purchase Spanish and Italian bonds instead of American ones?”

Andrew’s face reflected the same curiosity—American bonds were far easier to trade from multiple perspectives and in terms of transaction scale.

“American bonds are easier to trade, but that’s precisely why there are so many competitors.”

Indeed, after witnessing Mundell Partners’ success, other hedge funds had rushed into bond investments without hesitation, intensifying competition and driving down profit margins from the outset.

“No matter how large the market is, it’s better to seek opportunities elsewhere than to wade into a place where everyone’s fighting tooth and nail over a single pizza.”
“Hmm. You’re right—the competition is fierce.”

Andrew’s expression hardened slightly as he acknowledged my point.

“And there’s another reason. You’re aware that European nations, having largely escaped the ERM crisis, are now pushing forward with the issuance of a unified European currency, aren’t you?”
“Yes.”
“It’s been the talk of the town.”

Both men nodded slightly.
After Britain withdrew from the ERM following the humiliating Black Wednesday when the Bank of England buckled under attacks from hedge funds, the push for a common European currency had wavered momentarily. However, the European Community, led by Germany and France, quickly stabilized the chaos and concluded that their economies lacked sufficient integration to withstand external assault, spurring them to accelerate the single currency initiative.
However, the European Community (EC), centered on Germany and France, quickly resolved the confusion and concluded that because its economy was not fully integrated, it was defenseless against external attacks, prompting it to accelerate efforts toward issuing a single European currency.

“The central banks of Spain and Italy, which have maintained higher interest rates compared to other European nations due to elevated inflation, will have no choice but to lower their rates!”
“With high inflation, the central banks of Spain and Italy, which have maintained higher interest rates compared to other European countries, will have no choice but to lower their rates!”

His financial education over this period had clearly broadened his perspective considerably.
I found myself impressed that he’d grasped my intention faster than Andrew, the expert, and I continued my explanation.
Recognizing that he had caught on to the intention faster than Andrew, the expert, Seokwon inwardly thought he was quite impressive and continued speaking.

“Spain and Italy, which are maintaining benchmark interest rates in the 12% range due to inflation, will have to lower their rates by over 4% to align with Germany, which is the baseline.”

Andrew quickly finished his mental calculation and spoke with a gleam in his eyes.

“With returns like that, Europe would be far more profitable than the United States.”
“Indeed.”

I studied both their faces, my lips curving into a broad smile.

“They’re throwing a party with all their cards on the table—the single currency issuance and interest rate adjustment plans completely exposed. There’s no reason not to participate.”
“A party brimming with delectable opportunities and captivating prospects. Absolutely impossible to miss.”
“Precisely.”

When Landon Shore agreed, Andrew smiled darkly, like a hunter spotting fresh prey.
Both their minds were already calculating how to maximize profits from this windfall.

“Now that the stage is set, let’s make the most of it.”

I drained my coffee in one gulp, already anticipating the day when the cup in my hand would be filled with champagne instead.

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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