Golden Spoon Investment Portfolio - Chapter 67

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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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67. Why are we shorting bonds?

555 Madison Avenue, Manhattan, New York.
The trading desk, ordinarily cacophonous with the shrill ring of telephones and traders’ voices hoarse from shouting, had settled into a languid atmosphere as the Christmas holiday approached. The usual frenetic energy had given way to a quieter, almost contemplative calm.
Scattered throughout the expansive office were Christmas trees and festive decorations, while traders chattered animatedly about how they intended to spend the year-end bonuses they’d recently received, their faces alight with anticipation.

“Check this out. Isn’t it absolutely stunning?”

Ray, a Quantum Fund trader with dark hair and a stocky build who had closed out his positions early and was leisurely passing the time, accepted the brochure his colleague suddenly thrust toward him.

“Oh. This is a Porsche 911.”

Ray’s eyes widened as he gazed at the sleek automobile photograph printed on the brochure.

“Heh heh. What do you think? Pretty impressive, right?”

Tony, with his blonde, wiry hair, broke into a grin at Ray’s reaction.

“This is the new model that just came out, isn’t it?”

Tony nodded enthusiastically and spoke with evident excitement.

“Exactly. It’s a Carrera S with a 286-horsepower air-cooled engine.”
“Wow. That’s really impressive.”

Ray marveled at how the design preserved the 911’s distinctive character while the recessed headlights gave it an even more streamlined appearance, and he asked eagerly.

“Are you planning to buy this with your year-end bonus?”

Tony shrugged his shoulders with a self-satisfied expression.

“Already signed the contract.”
“Wasn’t it quite expensive?”
“With all the options added, it came to about eighty thousand dollars.”
“That’s reasonable enough.”
“You should buy one too.”
“Should I?”
“It’s a Porsche. Drive that to the club and you’ll have a line of beautiful women waiting for you!”

As Tony gently coaxed him, Ray’s expression brightened, and he studied the pamphlet in his hand intently.
Not just the two of them, but most of the traders were excited at the prospect of using their generous year-end bonuses to purchase expensive luxury goods or sports cars, or to travel with their partners to warm resort destinations.
Thanks to low interest rates that had kept the stock and bond markets blazing hot throughout the year, all of Wall Street was indulging in this extravagant bonus celebration.

Rodney, the CIO of Quantum Fund, sat on a spacious office sofa with a view of the towering Manhattan skyline beyond the expansive glass windows, and set down the documents in his hand to speak.

“Handle this matter as is.”

Ian, the Chief Manager seated on the sofa to the left, nodded and replied.

“Understood.”

Rodney pulled a fountain pen from his jacket, signed the document, and closed the approval folder as he asked.

“Starting tomorrow is the holiday break. Where are you planning to spend the year-end?”

Ian, placing the approval folder on his lap, spoke with a relaxed expression.

“I’m planning to spend Christmas with my family at our villa in the Caribbean.”
“Now that you mention it, you said you have a villa in the Bahamas.”
“Yes. When we visited two years ago, my wife fell in love with it, so we ended up purchasing a villa there.”
“Well done. With its subtropical climate and beautiful beaches stretching out, there’s no better place to rest and rejuvenate.”

Ian smiled softly and asked.

“Where are you planning to go, sir?”
“The children want to ski, so we’re heading to Switzerland this year.”
“Ah, I see. I visited the Matterhorn in Switzerland last year, and the snow-covered landscape was truly magnificent. Though my wife hated it because of the cold—she kept complaining about why we had to vacation somewhere even colder in the middle of winter.”
“That’s unfortunate. Anyway, I’m planning to stay in Lucerne through New Year’s and then return. Have a good holiday, and I’ll see you next year.”
“I hope you have an enjoyable vacation as well, sir.”

As Ian was about to bow and rise, a thought struck him, and he turned to Rodney with a question.

“By the way, sir—you mentioned before that I should keep a close watch on the Eldorado Fund.”

Rodney, who had been leaning against the back of the sofa, showed a flicker of interest.

“Why? Has something unusual happened?”
“Not long ago, I informed you that they liquidated all of their bond holdings.”
“That’s right.”

Rodney nodded slightly as he spoke.

“I believe you mentioned their returns were quite substantial, though I couldn’t determine the exact percentage.”
“Indeed. They managed to acquire European bonds ahead of other hedge funds, which allowed them to profit handsomely.”
“With Spain and Italy lowering interest rates in the interim, they captured gains not only from the long-short rate spread but also from long-term bond price appreciation. That would account for it.”

Ian smacked his lips in regret that the Quantum Fund had failed to snatch up European bonds first.

“Looking at it that way, the Eldorado Fund’s representative seems remarkably fortunate.”
“Luck alone couldn’t produce results like this.”
“Are you saying this was a calculated bet from the beginning?”
“Without that kind of conviction, such a bold investment would be recklessly dangerous.”

Though they didn’t know the exact figures, both men understood that the Eldorado Fund had leveraged their position to invest in bonds on a scale of hundreds of billions of dollars.
Even if leverage was commonplace, such an investment would be foolishly risky without absolute certainty.

“Even if it was luck, when it repeats multiple times, that becomes skill.”
“That’s true.”

Ian nodded in agreement.

“If my suspicion is correct, this isn’t ordinary decisiveness and nerve.”

Ian, speaking with genuine admiration, recalled something Rodney had mentioned before.

“Didn’t you say the Eldorado Fund’s representative is still under thirty?”
“He graduated from Harvard University this year, I believe.”

Rodney recalled the face of Seok-won, whom he had encountered by chance at an investment briefing held in New York.
The confident, straightforward gaze had left a lasting impression, and he still remembered it vividly.

“A mere boy couldn’t possibly have made such an investment decision. I heard Andrew, who used to work at Goldman Sachs, is the senior chief there, but I never expected his abilities to be this remarkable.”

Rodney, who had been sitting with his arms crossed, paused in thought before shaking his head.

“He was quite talented, but not to that degree.”
“Then are you saying there’s another skilled individual over there that we’re unaware of?”

As Ian tilted his head and looked at me, Seok-won’s face involuntarily surfaced in my mind once more.
I sensed at a glance that he was no ordinary person, yet Seok-won was far too young.

‘Surely not.’

I deliberately dismissed the thought and muttered to myself.

‘There must be an exceptional collaborator assisting him from the sidelines.’

Otherwise, achieving such investment returns in such a short span made no sense.

“Whoever is driving the investment, if they possess such exceptional skill, their identity won’t remain hidden for long.”

Ian nodded in agreement.

“I’m genuinely curious who this person is.”

I shared that curiosity.
Uncrossing my arms, I leaned back against the chair and directed my gaze toward Ian.

“But what were you originally trying to tell me?”

Ian then recalled his original purpose and straightened his posture.

“After liquidating all their bond holdings, we’ve detected that the Eldorado Fund has been building short positions over the past several days.”

At this unexpected revelation, I furrowed my brow and asked.

“You’re saying they’re shorting bonds?”
“Yes, sir.”
“How much volume are we talking about?”
“I haven’t been able to confirm the exact amount, but it’s clear they’re building a substantial position.”

In derivatives trading, exposed positions and scale were fatal vulnerabilities, making it difficult to obtain precise information.
The fact that we’d even discovered Eldorado Fund was shorting bonds was only possible because Quantum Fund had uncovered it.

“Selling bonds and taking short positions… surely they believe the benchmark rate will rise.”

As befitted the CIO overseeing Quantum Fund’s investments, I immediately grasped Seok-won’s intention.
Ian’s response was skeptical.

“Low interest rates can’t continue indefinitely, but without any signs, they won’t suddenly raise the benchmark rate. Moreover, with midterm elections scheduled for next year, even if the Federal Reserve considers a rate hike, the White House will block it.”
“You’re right—raising rates before an election is practically suicide.”
“Exactly.”

It made no sense whatsoever, yet I couldn’t shake an inexplicable unease.

“But why are they shorting bonds in the first place?”

Ian shrugged at my puzzled question.

“I find it equally incomprehensible, which is why I’m reporting it. Perhaps they’ve grown overconfident after several successful speculative bets and made a miscalculation.”
“Is that so?”

Something else seemed to lurk beneath the surface, yet nothing concrete came to mind. I stroked my chin thoughtfully for a long moment, but no conclusion emerged. Finally, I looked up and spoke.
After stroking his chin with one hand and pondering for a long time without reaching a conclusion, Rodney lifted his head and spoke.

“Understood.”
I understand.

* * *

“Who’s talking behind my back again?”

Standing in the Family Estate Garden late at night, I squinted slightly and scratched my ear with my finger.
Then, hearing meowing sounds, I looked down to find a mackerel tabby and two Tricolor Cats with their tails held high, pestering me at my feet for food.
The mother Tricolor Cat sat a few paces away with her front paws together, watching her kittens as if proud of them.
They were the stray cats and kittens I had discovered by chance last year and started feeding.
After getting comfortable meals for several months during their nursing period, they had settled permanently beneath the garden’s wooden deck with their offspring.
There had originally been five kittens, but two died, leaving these three survivors.

“Meow.”
“Mew.”

Noticing I had drifted into thought, the kittens tapped my legs with their front paws, pestering me.

“Ugh. So now you all think I’m just your food delivery service.”

I opened a wet food can for cats and poured it into a wide ceramic dish, grumbling as I set it down.

“There, I’ve done it. Stop meowing so loudly, or if Father gets angry, you’ll all be chased out.”
“Meow.”
“Mew.”

The kittens, somehow managing to respond, buried their heads in the bowl and began eating the tuna.
Then the mother cat sauntered over from behind, claimed a spot, and began eating as well.

“Seeing how their size has become similar to the mother’s, these little ones have grown up.”

As I sat in a parasol table chair nearby, watching the cats, my phone suddenly rang in my pocket.
The cats startled and lifted their heads, but then perked their ears and returned to eating. I pressed the answer button and took the call.

“Hello.”
[Boss, it’s me.]

Hearing Landon Shore’s voice through the phone, I leaned back and spoke.

“Didn’t you say you were going on vacation to Miami?”
[I contacted you because there’s one last report before I leave.]
“What is it?”
[I’ve completed all the short selling on major banks including JP Morgan as you instructed.]
“Good work.”

When the bond market collapsed, the impact was inevitable for the major Wall Street banks that had provided excessive leverage to hedge funds.
Naturally, Seok-won seized the opportunity without hesitation, instructing short sales against the major Wall Street banks.

[Aren’t you nervous about pouring all the profits we made last time into this?]

Seok-won gazed down at the cats lapping at their plates with soft smacking sounds, then answered with unhurried composure.

“It’ll multiply several times over and come back to us soon. What’s there to worry about?”
[I’m just anxious that something might go wrong. I haven’t been able to sleep.]
“That won’t happen, so relax and enjoy your vacation.”

At that, Landon Shore exhaled a small sigh.

[Well, it’s too late to turn back now anyway.]

Landon spoke with deliberately bright resolve, as if affirming his own conviction.

[I believe in the boss’s bet this time as well.]
“It will. Next year will be incredibly busy from the start, so get plenty of rest beforehand.”
[Understood. Have a wonderful Christmas, boss.]

Then Landon Shore hung up the phone.
Setting down his mobile, Seok-won gently stroked the fur of the young Tricolor Cat, who had finished her meal and leapt onto his lap, a deep smile playing at his lips.

“By next year, all of Wall Street will have the name Eldorado Fund etched vividly in their minds.”

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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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