New York 2006

Chapter 181 The Sudden Crisis

Early in the morning on April 2008, 4, in an office building in Manhattan, New York, Jen Psaki was drinking coffee and looking at the Wall Street Journal, a traditional mainstream Republican newspaper. Today's front page headline was about Logic.

The title is: "Short-selling the subprime mortgage crisis, the short-selling logic hidden under the eyes of the public!"

"The author often saw Logic in financial news some time ago. He is known as an investment genius and has invested in Apple, Amazon, Booking Holdings and Netflix. So I became curious, how much money does Logic have in total?"

"According to the information that can be found, Logic's specific investment amount in Apple, Amazon, and Booking Holdings is unclear, but he invested 5 million US dollars in 6000% of Naphi. The movie Twilight invested 5000 million DJ Magazine and Electronic Music Records invested USD 6000 million. SolarCity invested USD 500 million, and Xiyin Clothing invested USD 750 million. Logic Investment Company has a registered capital of 4000 million, with a total cash expenditure of over 2.2 million knives.”

"$2.2 million, which is far more than the $1.4 million that Logic earned in the recording industry at that time. The author can't help but wonder where Logic's extra money came from."

"After in-depth analysis of Logic's other companies, except for record companies, all other companies are losing money, but there is one exception, and that is a company that has always been a mystery, Logic Investment Company. This company was Logic's investment in May last year At that time, I founded a private equity investment company. Since it is a private equity investment company, the specific operations and income do not need to be disclosed to the media and the public. Therefore, the income of this company has always been a mystery."

"Some time ago, I obtained the investment records of Logic Investment Company."

"Through the analysis of documents, Logic shorted subprime-related products by purchasing CDS in February last year, investing a total of 2060 million US dollars. In 2007, it made 2.83 million US dollars from liquidation, and the rate of return reached an astonishing 1400 %."

"We have been talking about the short-selling king John Paulson in the media, but his return in 2007 was only about 700%. Little did we know that the real short-selling king turned out to be Logic, a young man who seemed harmless to humans and animals. With such an amazing operation.”

"In 2008, Logic, a big short seller, was still not satisfied. In January this year, with $1.05 million and double leverage of $2.1 million, it began short selling, involving banks and securities companies that invested in products related to the subprime mortgage crisis. .AIG, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, Merrill Lynch, AIG, Washington Mutual..."

“According to documents from the end of March, Logic’s short-selling investment return rate has reached 30%, and it has not been cleared yet.”

After Jane Psaki read the newspaper, she was stunned with the coffee in her hand and did not move for a long time.

Jingle bell, jingle bell!Jen Psaki picked up her phone and saw it was Logic calling.

Logic only said one sentence before hanging up the phone: "Come to my house right away. We have something to discuss!"

Meanwhile, the study at home.Xu Youyu and Luo Ji were having a heated discussion.

Luo Ji pointed to the picture in the Wall Street Journal, brought it to Xu Youyu and shouted loudly: "Why, our investment records will be leaked to the media. Who did it?"

"Calm down first, Logic!"

Xu Youyu hurriedly spoke: "You have also seen that the document only contains our investment records in Deutsche Bank, and there is no record of your stock investment. This proves that the document was leaked from Deutsche Bank. And this report format , different from our company’s, it’s Deutsche Bank’s style!”

Luo Ji's investment company does all its stock buying and selling by itself, without going through a third party.Because his private equity fund has obtained the qualification for direct admission, it can purchase stocks directly without going through a securities company. It reduces commissions and saves a lot of money. Therefore, only his company has stock operation records.

But these require leverage, and for more complex financial methods, we need to find large third-party institutions. Luo Ji has cooperated with Deutsche Bank for a long time, so these operations have always been done by him.

Luo Ji calmed down: "Why did Deutsche Bank leak my investment records?"

Xu Youyu thought for a while and said: "Some time ago, the banking industry generally started to lay off employees. It should be someone concerned about Deutsche Bank who noticed that your investment was of great news value, so they quietly kept the evidence! After leaving their jobs, they no longer have any worries. , sold the evidence directly to the newspaper.”

"Fxxk!"

Luo Ji looked at the newspaper in his hand: "The Wall Street Journal selectively reported that I lost $[-] million in investment in October!"

Bang bang bang, there was a knock on the door.It was Fiona who walked through the door, followed by lawyer Jamie.

Fiona asked with concern: "Feili. I can hear your shouting from outside. Are you okay?"

"It's okay, it's okay. Just go out and wait for Braun and the others!"

Luo Ji closed the door and said to lawyer Jamie, "Did you see the news in the Wall Street Journal today?"

Lawyer Jamie said: "When we were downstairs just now, Fiona read the newspaper to me."

Luo Ji said harshly: "This information was leaked by Deutsche Bank, and I will make them pay the price! Prepare for legal action and make the problem bigger!"

Lawyer Jamie said worriedly: "They are a global international bank. Do they have to be so impulsive? You have offended so many companies on Wall Street, do you want to add another enemy?"

Luo Ji looked at Jamie seriously: "Then what do you think we should do?"

"It's better to reconcile with them."

Lawyer Jamie said: "Deutsche Bank is unreasonable in this matter. They certainly don't want to be accused of leaking customer investment information. Moreover, you are a celebrity and your influence is naturally great. They are also afraid that you will attack them in the media." company."

Luo Ji said depressingly: "Fxxk, those institutions on Wall Street must hate me to death now. The news about me will definitely be known all over the United States."

Lawyer Jamie said, "Then do you still want to prepare for a lawsuit with Deutsche Bank?" Luo Ji thought for a moment and said, "No matter, prepare the materials first, and at least use a threatening gesture to get Deutsche Bank to compromise."

"Okay." Attorney Jamie continued: "Do I want to go now?"

"Wait a moment, someone will come over in a while. There are still things to discuss."

The three continued to discuss related topics.

Luo Ji said, "What should we do now? I can already imagine how people will think of me after this news spreads. I am a celebrity, so I am naturally topical. People now hate short sellers and Wall Street people! We Public relations now have to be done.”

Lawyer Jamie said: "It's not as bad as you think..."

Bang bang, there was a knock on the door, and Fiona arrived with her agent Braun and political consultant Jen Psaki.

Fiona then looked at Luo Ji and said, "Feili, there is your discussion on TV, CNBC's financial news."

Luo Ji immediately turned on the TV in the study room, which was showing news about Luo Ji. A male host was discussing him with two guests, a man and a woman.

Fiona closed the door, and the six of them stayed in the study and watched TV.

"Hahaha, I really didn't expect that Logic had the guts to short the subprime-related industries in early 2007. You must know that at that time, the term subprime mortgage crisis had not yet entered the public consciousness. At that time, his industry Only 16 years old. Why do you think Logic dared to short subprime mortgage-related products at that time?”

The male guest said seriously: "I don't think Logic came up with it himself. He was still a high school student at that time and had just become famous. Someone must have told him where to learn about such a complex financial instrument as CDS."

"Logic is an investment genius!"

The female guest was unhappy: "Haven't you heard? Logic's SAT score reached 1566. Some experts said that his IQ reached at least 140. Don't understand him in terms of ordinary people. He is a genius! No matter what In the music industry, or in the investment field!”

The male guest said: "I admit that he is a genius, but someone must have recommended CDS-related products to him."

The host smiled and said: "Hahaha, you are right."

A photo of Xu Youyu and Logic appeared on the screen. It seems that one day when the two went to work together in the company, they were talking outside the building and were photographed by the paparazzi.

The host continued: "We found out that the CEO of Logic Investment Company is this person. He is Doctor Xu, who graduated from Princeton with a Ph.D. in mathematics. At the end of 2005, he predicted that the decline in housing prices might lead to Come the rise in mortgage default rates.”

The male guest looked proud and said that there was nothing wrong with his judgment.

The female guest said, "Okay, even if it was Xu who recommended Logic, but in your case, at the beginning of 2007, someone told you that the real estate industry would collapse. Do you believe it? You know that the real estate boom in the United States has lasted for 20 years. Over the years, there were a few people at that time who would believe that theory.”

The host continued: "CDS shorting the subprime mortgage market has already appeared at the end of 2005. The theory may have appeared earlier, but few people have seized this opportunity. Apart from John Paulson, there seem to be only a few people on Wall Street. I personally jumped at the opportunity.”

The female guest spoke sternly to the male guest: "Doesn't this prove that Logic is a genius? There are so many people on Wall Street, but only a few people seize this opportunity."

The male guest said, "I'm not denying Logic's genius. I'm just saying that someone helped him. Why are you so angry!"

Jen Psaki smiled: "It seems like this female guest is your fan!"

Everyone in the room laughed, and Luo Ji felt much better.

He found that things were not as serious as he thought.Everyone did not hate him as much as he imagined when they heard the news.

It is true that people hate the subprime mortgage crisis, but this crisis was not caused by Luo Ji. He just seized the investment opportunity.People hate Wall Street, but they won’t hate him, an investment genius who came from a low-level background and seized the opportunity!

The host immediately came out to smooth things over: "So what do you think the future performance of AIG, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, Merrill Lynch, American International Group, and Washington Mutual, which Logic is currently shorting, will be? "

……

After reading the news, several people discussed for several hours and determined the direction of public opinion and public relations.Luo Ji then spoke to several people.

"Yesterday someone passed the news to me that the prosecutor of the Southern District of New York and the FBI are investigating my investment company."

"Uh." Xu Youyu suddenly fell into embarrassment.

Luo Ji then looked at Xu Youyu with a smile: "The crow's mouth you had before has come true!"

(End of this chapter)