Chapter 383 First Project

Chapter 383 First Project

Chapter 383 First Project
An Rushong didn't know who the people in "Stock Mavericks" were, or in other words, except for Macaulay and Mike, he didn't know who the remaining nine people were, what their identities were, and what organizations they worked for.

However, he has joined the "Seeking Alpha" website for several months. Although he does not speak very often in the forum, he has a certain understanding of the basic situation of the members because he logs in to the website from time to time.

As mentioned before, the "Seeking Alpha" website was established not long ago, and the people who often hang out there basically have a background in finance. What's more, a large number of them work in some well-known financial institutions on Wall Street.

Compared with ordinary people, these people not only have more professional financial knowledge, but also have more sensitive noses and wider sources of information.

Just like the fact that JPMorgan Chase was preparing to acquire Bear Stearns, there was really no news from the outside world. Although An Rusong had been in trouble recently, he was always paying attention to the news in the financial market.

Bear Stearns' problems have been going on for a long time. In the past year, bad news has piled up one after another, and it was about to crush this large brokerage firm. Its stock price has plummeted from $159 per share at the beginning of last year to less than $70 per share now.

In An Rusong's view, the biggest problem Bear Stearns faced was actually the depletion of liquidity, or in Chinese parlance, the broken capital chain. One piece of bad news after another shattered investors' confidence, and as a securities firm, Bear Stearns mainly relied on credit and investment. Now, both of these had panicked and fled, so Bear Stearns naturally could not hold on.

However, over the past period of time, news from all sides have said that the Federal Reserve will not sit idly by and watch a systemic collapse of Bear Stearns. Therefore, at a critical moment, the Federal Reserve will definitely take action to inject liquidity into Bear Stearns.

But now, a member of the "StockMavericks" group has revealed that both the previous news released by the Federal Reserve and the remarks made by President Bush were actually smokescreens. The Federal Reserve had no intention of injecting funds into Bear Stearns. Their way of avoiding a systemic collapse of Bear Stearns was to sell it to JPMorgan Chase.

The member who broke the news in the group claimed that JPMorgan Chase's plan to acquire Bear Stearns has been brewing for a long time. Although there is no evidence now, there is a great possibility that the voices that have been pessimistic about Bear Stearns over the past period of time should be related to JPMorgan Chase.

Bear Stearns is indeed in trouble, there is no doubt about that, but the collapse of Bear Stearns's stock price in the past period of time is also abnormal. According to the current share price of Bear Stearns, which is less than $70 per share, if JPMorgan Chase wants to acquire it, the total investment amount is estimated to be less than $20 billion.

The reality is that Bear Stearns still holds more than $170 billion in mortgage securities, although these securities are considered worthless as the subprime mortgage crisis intensifies. In addition, in addition to all assets, Bear Stearns also has $20 billion in cash on its books.

Of course, in the current market panic situation, if Bear Stearns cannot rebuild market confidence, the $20 billion in cash will certainly not be kept. But if JPMorgan Chase intervenes, it should not be difficult for Bear Stearns to rebuild market confidence.

But the problem now is that if Bear Stearns does not accept the acquisition by JP Morgan Chase, it will go bankrupt and the cash in its hands will not be saved. But if it accepts the acquisition by JP Morgan Chase, the latter will clearly swallow it up in one gulp. The acquisition agreement of less than 20 billion US dollars includes all the assets of Bear Stearns.

Most importantly, the group members who broke the news believed that as the current subprime mortgage crisis deepened, JPMorgan Chase could not really come up with $20 billion to acquire the troubled Bear Stearns, and they were destined to further reduce the acquisition costs.

If nothing unexpected happens, the stock price of Bear Stearns will continue to fall in the future, or even plummet, because only in this way can JPMorgan Chase further reduce the acquisition cost. At the same time, it can use the threat of Bear Stearns' collapse to further force the Federal Reserve to intervene fully.

An Rusong could understand the topics discussed by these people in the group. Obviously, in their view, the difficulties encountered by Bear Stearns today were not just the operating difficulties of a securities firm caused by the subprime mortgage crisis. Behind it lay a more intricate game between Wall Street, the Federal Reserve and the White House.

Since the outbreak of the subprime mortgage crisis, both the White House and the Federal Reserve have taken many measures to rescue the market. However, it is obvious that in the eyes of Wall Street, these measures are far from enough. On the contrary, those financial giants believe that the Federal Reserve and the White House should do more, such as providing them with more liquidity, that is, taking out more real money.

Bear Stearns, which was pushed to the edge of the cliff, was a tool used by Wall Street to force the White House and the Federal Reserve: either everyone watched Bear Stearns collapse, thereby completely detonating the nuclear bomb of the subprime mortgage crisis, or the Federal Reserve took out money to help Wall Street survive this disaster.

An Rusong didn't know whether what these people in the group said was right or not, but he remembered that in 2008 in his previous life, the US government and the Federal Reserve did provide a lot of real money to Wall Street, which was on the verge of collapse. At that time, the bigwigs of Wall Street, while enjoying the aid from the Federal Reserve and the US government, gave astronomical dividends to senior officials.

These outrageous policies led to extreme hatred of Wall Street among ordinary Americans, so much so that two or three years later, a massive "Occupy Wall Street" movement was triggered.

In addition, An Rushong also agreed with the judgment of the group members, that is, now is definitely the best time to short Bear Stearns stock. As long as they act in a timely manner, they will definitely be able to reap huge profits from this operation.

The discussion in the group quickly gained the approval of almost everyone, so "Judas Iscariot", as the group leader, summarized the relevant discussions and formed a systematic document, which was distributed to every member of the group. According to "Judas Iscariot", he will later make a project plan based on this document, and then everyone will meet to discuss and determine their respective investment amounts and shareholding ratios. This project is also the first project that everyone has worked together to do after the group was established.

To be honest, as the last member to join the group, An Rushong rarely spoke during discussions within the group. After all, he was not a practitioner in the financial industry and lacked relevant sources of information. Talking too much would not only fail to play a constructive role but might also reveal his weakness.

However, An Rushong did not underestimate himself. He might not be as professional as those in the group, nor as well-informed as them, but he had an advantage that no one in the group had, and that was that he was a reborn person and had some memories from his previous life in his mind.

These memories may not be comprehensive and may not be used most of the time, but once they are used one day, they may play a role in reversing the overall situation.

Groups like "StockMavericks" are not destined to be chat groups that are used for bragging and gossip. The members of the group should be very busy at work, so after a project-related discussion ends, the group quickly returns to silence.

Seeing that no one was speaking anymore, An Rushong closed the group chat window and opened the chat window with Mike. Just as he was thinking about saying something to the other party, the phone that he had placed next to the computer screen rang.

Looking at the phone screen, the call was from Mike.

An Rushong pressed the answer button and turned on the speakerphone. Then he picked up the slightly cold coffee in front of him and took a sip.

"An, how about it, are you interested in this project?" As soon as the call was connected, Mike's voice came from the phone. He seemed to be eating something, and his voice was muffled and a little unclear.

"Of course," An Rusong held the coffee cup in his hand, playing with it unconsciously, and said, "Who wouldn't be interested in making money?"

After a pause, he continued with a smile, "But you, my friend, I remember you are not very interested in stocks."

"Haha, there's no way. I have to make more effort for my son now," Mike laughed.

"Son?" An Rusong was a little surprised. Mike and his wife Jaslin only had one child, their daughter Irene and son
"That's right, my son," Mike continued with a smile, "I didn't tell you before, Jaslin is already two months pregnant."

An Rushong blinked and thought to himself: Can we tell whether it’s a boy or a girl after only two months of pregnancy?
However, he didn't ask such a stupid question to spoil the mood. Who knows, maybe Mike and his wife have a long-cherished wish to have a son.

"Ha, this is really good news," An Rusong said with a smile without questioning the other party's statement, "It seems that I have to spend some time preparing a gift."

"Don't worry, there's still plenty of time," Mike said with a smile, "Now, the first thing you should consider is how to get rid of your current troubles. In addition, you also need to plan how much money you are going to invest in the next project."

"What's your suggestion?" An Rushong asked back.

"I am quite confident in this project, so I am prepared to invest more," Mike said. "However, I think everyone should have the same idea, so how much we can invest in the end depends on the specific situation."

"I'll listen to you," An Rushong said concisely.

(End of this chapter)