Golden Spoon Investment Portfolio - Chapter 453

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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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453. I’m already looking forward to tomorrow.

September 2, 1998.
Manhattan, New York, where skyscrapers stood densely packed against the skyline.
A tall, powerfully built man in a charcoal gray suit—Dan Perry, Chairman of Merrill Lynch—pushed open the wooden door and stepped inside.

“Good morning, Clara.”

“Good morning, Chairman.”

The blonde secretary, who had been working at her desk, rose and greeted him with a fresh smile.

“I’ll have a coffee, please. The usual.”
“Of course.”

Clara answered briefly, watching Chairman Perry walk past with a briefcase in one hand.

“A letter came from LTCM. I’ve placed it on your desk with the other mail.”
“Is that so?”

Chairman Perry’s eyebrows twitched slightly as he continued into the office.
The Chairman’s Office was appointed with expansive floor-to-ceiling windows overlooking the skyscrapers of Wall Street and elegant interior décor.
Treading across the plush carpet, Chairman Perry set his briefcase on the desk and hung his jacket on the coat rack.
As he settled into the cushioned chair, his eyes fell upon the neatly stacked pile of mail.
Recalling Clara’s words from moments before, Chairman Perry reached out and picked up the envelope bearing the LTCM logo from the top of the stack.

“I’ve brought your coffee.”

Clara entered and set a cup of coffee with a rich aroma of fresh beans on the desk.

“Thank you. You can go now.”
“Yes.”

Clara gave a light bow and left the office.
Chairman Perry paused momentarily, then resumed, using a silver letter opener to slit open the sealed envelope and withdrew the letter inside, unfolding it.

[… As you all know, the shockwaves surrounding Russia’s moratorium declaration have created dramatic and substantial volatility in the markets over the past month.
Unfortunately, our LTCM portfolio has not escaped the fallout from this event, and we have experienced a sharp decline in net asset value.]

Chairman Perry’s expression twisted as he read that far.
He had been making excuses to avoid disclosing the portfolio, and as he had feared, they had taken losses on Russian government bonds.

“Tsk.”

Chairman Perry clicked his tongue briefly and continued reading the letter.

[…Asset value has fallen 45% in August alone.
In light of past volatility, such catastrophic losses have been a tremendous shock to us, and for other Wall Street investors, they were nearly unavoidable natural disasters.
However, considering our fund’s historical performance, we are confident we can recover from these losses….]

“…!”

At the point where asset values had been cut in half, Chairman Perry froze, his eyes widening in shock.
Wondering if he had misread, he rubbed his eyes with the back of his hand and looked again, but the numbers on the letter remained unchanged.

“This is insane!”

Chairman Perry, who had spat out the crude curse, trembled violently while crumpling the letter in his hand.
It was no wonder—losing half the money was completely outside his expectations.
Of course, knowing that LTCM had touched Russian bonds, he had suspected they would suffer some losses.
But he naturally assumed they would have cut their losses and exited when problems arose—yet they had lost half their value!
He had never imagined in his wildest dreams that such an absurd, massive loss would occur.

“How in the world could this have happened!”

Chairman Perry shouted in a voice filled with rage.
Wasn’t this a fund created with the participation of two Nobel Prize-winning economists!
Moreover, having consistently recorded high returns over the past several years, he had believed in it absolutely, and now that the results had turned out this way, Chairman Perry was consumed by a sense of betrayal.
What infuriated him most of all was that they had said nothing until now and simply sent a single letter like a notification, informing him of the loss.
Grind.
Clenching his teeth, Chairman Perry immediately picked up the receiver and called Wiseman.
And these same kinds of incidents were unfolding at various Wall Street banks including Goldman Sachs, Lehman Brothers, and Bear Stearns.

* * *

Seok-won sat on the outdoor balcony of the Penthouse in a thin shirt.
A cool autumn breeze rustled through his hair as he sipped his coffee, holding a market trend report in one hand—his relaxed demeanor was unmistakable.
Then his phone vibrated on the table with a sharp buzz, and Seok-won immediately answered the call.

[Boss. It finally happened!]

At Landon Shore’s excited voice, he set down the report and leaned back in his chair.

“Explain it in a way I can understand.”
[Jacob Wiseman sent a letter today to Wall Street banks connected to LTCM. Bloomberg obtained it and just released it as breaking news.]
“…!”

Seok-won’s eyes widened with interest as he asked.

“Is it about Russian bonds?”
[Yes. In this market crash, they lost 45% of their assets in both bonds and equities.]

Though I had anticipated this, hearing that half their assets were wiped out made me exhale sharply.

[According to the letter, they lost a staggering 1.9 billion dollars.]
“With losses that severe, the banks that lent them money must be in complete upheaval.”
[What more can I say? The moment Bloomberg’s breaking news hit, not only Bear Stearns, which handles LTCM’s liquidation settlement, but also Goldman Sachs, Lehman Brothers, and Merrill Lynch—every institution known to have any connection—saw their stock prices plummet.]

Seok-won nodded slightly, phone pressed to his ear.

“It’s a major negative catalyst hitting at a time when investment sentiment is already fragile. The shock will be unavoidable.”
[You’re absolutely right. With such high anxiety about risky assets, everyone will be eager to sell first and ask questions later.]
“How are the banks that lent them money reacting?”
[They’ve only just discovered they were holding a time bomb, so they’re likely scrambling to assess the situation. They probably won’t take any action until they’ve confirmed exactly what state LTCM is in.]

Indeed, with such enormous sums at stake, acting hastily could only make matters worse. A cautious response was the right approach.

‘But bad news always comes in clusters.’

Knowing what would unfold next, I thought they would soon regret not taking swift action.

[On top of the losses from the Russian sovereign debt collapse hitting our own arbitrage department hard, with LTCM’s crisis on top of that, the major Wall Street banks must be in absolute agony.]
“The LTCM crisis is only just beginning, so the market decline will continue.”

Seok-won answered leisurely.

[It’s already dropped 10% from its peak, and just thinking about it falling further makes me dizzy.]

But contrary to his words, Landon Shore’s voice brimmed with vitality.
The more the stock market plummeted, the greater the profits for the Eldorado Fund with its short positions—a natural consequence.

Seok-won spoke with a deep smile playing at the corners of his mouth.

“You showed Andrew and Dan the list I gave you yesterday, right?”
[Of course.]
“Once we hit bottom, I’ll send you a signal. The moment we liquidate our positions, sweep up all the stocks on the list I provided.”
[I’ll acquire as much volume as possible at the lowest prices, so rest assured.]

Landon Shore answered with confidence.
He intended to scoop up those ten-baggers that would soar to the heavens riding the dot-com bubble, acquiring them at rock-bottom prices during this crash.

‘Come to think of it, this is the last bargain sale before the surge.’

Seok-won muttered softly to himself.

[And there’s one more thing I need to report.]
“Go ahead.”
[Sony has contacted us—they’re accepting our proposal.]

Seok-won perked up and asked.

“Is that really true?”
[Yes. They’ve agreed to transfer 100% of Sony Music’s stake for $4.8 billion as proposed.]

Back in the thriving 1980s, Sony had acquired the CBS Records Group owned by CBS for business diversification, renaming it Sony Music.
Subsequently, as they acquired Columbia Pictures and TriStar Pictures, which had been owned by Coca-Cola, they changed the name once more to Sony Music Entertainment.

“It was a division Sony had invested considerable effort into, yet the negotiation wrapped up surprisingly smoothly.”
[The Sony of old would never have let it go, but now their core electronics business is under threat from latecomers, isn’t it? Moreover, the media division hasn’t generated the profits they initially expected. It seems they want to divest this opportunity and focus on electronics.]
“True—Sony’s once-dominant position has certainly declined considerably.”

Korean companies like Samsung, LG, and Hyunwoo—firms Sony wouldn’t have given a second glance to before—were now snapping at their heels, rapidly seizing market share from Sony and other Japanese manufacturers.
Particularly in semiconductor DRAM, they had gone beyond merely allowing competition; Korean companies were now pushing them into a corner.

‘Thanks to that, I’ve managed to acquire Sony Music, which will become a future cash cow, far more easily than expected.’

Though it currently suffered from low profitability and was treated as a burden, Sony Music was one of the two crucial wings that would become the driving force behind Sony’s revival once digital transformation accelerated. With Seok-won having seized it, Sony’s future recovery had become uncertain—but that wasn’t my concern.
Seok-won had already taken it, so Sony’s prospects for resurgence had grown murky, but that wasn’t something I needed to worry about.

“Don’t hesitate. Finalize the contract immediately.”
[Understood.]

After exchanging a few more words, Seok-won ended the call and set down his phone with a satisfied expression.
Everything was unfolding according to plan, and the smooth progress filled him with contentment.

“If only Russian sovereign debt had collapsed, we could have managed the fallout somehow. But if an unexpected variable emerges here that widens the bond spread further, then we’ll enter territory that’s completely beyond our control.”

Seok-won lifted his teacup, took a sip of coffee, set it down, and broke into a broad smile.

“Hehehehe. I’m already looking forward to tomorrow.”

* * *

Ring! Ring!

Fuller, the chairman of Bear Stearns, was preparing for work in front of the mirror, tying his necktie, when the loud ringing of the telephone made him frown slightly.

“Who’s calling at this hour?”

Chairman Fuller grumbled as he picked up the receiver.

“Hello.”

The urgent voice of Joseph Loyer, Bear Stearns’ CIO, came through the line.

[Chairman, have you heard the news?]

The abrupt question made Chairman Fuller’s brows furrow.

“What news are you talking about?”
[Moody’s has downgraded the credit ratings of Brazil and Venezuela.]
“…!”
[Moreover, Mexico and Argentina are also under review for sovereign credit rating downgrades.]

Like a bolt from the blue, Fuller froze mid-breath, his mouth agape, before unleashing a torrent of crude expletives.

“Damn it!”
[Chairman, what should we do?]
“Call an emergency meeting immediately and have them assess the total redemption contract obligations across all emerging markets, especially South America!”
[Understood.]

Fuller slammed the receiver down with visible irritation, then stomped his foot in a fit of rage.

“Hell!”

The situation was already dire from yesterday’s LTCM crisis, and now, with successive catastrophic blows raining down, a sinister dread consumed his entire being.

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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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