By October 2nd, the Dow Jones index began to slide after failing to reach a new high. In just a week, the Dow dropped over 6%.
In light of this situation, economists switched to full-on spin mode. They wanted the stock index to behave as they said it would. After all, it was clear that the common folks were losing money, and they hoped the stocks would bounce back.
Being a consultant was more painful than it seemed. They weren't completely unaware of what was about to happen, nor were they intentionally misleading anyone. They could only say what the public wanted to hear. That was all there was to it.
God didn't hear the prayers of the investors. As the new week started, the stocks continued to fall. Some folks began to panic, especially those who had borrowed to invest.
The so-called experts pointed out that due to the previous excessive gains, a correction was necessary. The recovery of the American economy was evident, which could fully support the current price levels.
...
"Are you feeling a bit down?"
"My neighbor moved away." William White paused, thought for a second, and replied, "That shouldn't matter, has it really dropped that much yet?"
Nastassja felt uneasy. If she hadn't asked that jerk, her little investment might have gone down the drain.
"They got divorced, and the house was taken by the bank."
"Heh, you must have advised her, right?"
"Yeah, how did you know? I told her, if you're getting insider tips from the waitstaff, that stock's toast, but she wouldn't listen."
"Then what's the point of being upset? You can't save someone who won't listen. It was all destined to happen. Since you did your best, you've fulfilled your obligation as a friend. There's an old Wall Street saying: if you hate someone, send them to the stock market because it's hell."
...
William White wasn't feeling great either. In the following period, things were sure to get worse. If he couldn't bear it now, how could he withstand the next storm? The turmoil they were experiencing was just a small squall before the hurricane hit.
At the end of the week, the bounce the experts had predicted never materialized, and the Dow fell again by 9%.
In two weeks, a 15% drop was no small feat. Fortunately, the American public seemed to have learned to diversify their investments. Although there were those who went all in, they weren't the majority.
The experts remained optimistic, predicting that next week the market would dip before rallying. After some turbulence, they believed it would regain lost ground.
Alright, this expert might be better off reading palms. Who knows if he has tarot cards.
...
"Sir, things aren't looking good. A drop of over 15% in two weeks has triggered a lot of investors' stop-loss points. Monday isn't going to be pretty." Filson spoke, clearly quite relaxed.
"Ha-ha, let them worry. We need to raise some funds. If the drops continue, it'll be a chance to scoop up some chips at a discount. Several public companies will need to prepare buyback plans."
"Sure thing. I'll get right on it."
...
If one word could describe that day, it was disaster.
Monday, October 19, was a day to witness calamity. The treasury secretary was acting bizarre, starting early in the morning to shift blame, but unfortunately, this time, the blame landed on the heads themselves.
What the big man said was that if the rates for the Japanese and the Germans didn't come down effectively, he would have to devalue the currency because that was the only way to effectively lower the U.S. trade deficit.
Currency devaluation?
Whoa, that meant all capital priced in dollars faced the risk of devaluation. Wasn't this guy just saying the American economy was fantastic?
The Wall Street sharks were best at not just stock trading, which was child's play. What they excelled in were various mathematical models and investment portfolios.
In simple terms, it was like a chain of boats. Dozens of stocks combined and bundled into funds for sale. These portfolios were also linked to short-selling mechanisms.
Wall Street was a mathematician's paradise; they could tie you in knots with their tricks.
Ever wonder why the subprime crisis hit so hard?
Through these portfolios, risks were magnified a hundredfold or more. To put it bluntly, America turned into an economic monster; no amount of money could fill its vast pit.
A daily drop exceeding 22% was indeed shocking; it had created a Guinness World Record.
Adding that to the previous two-week drops had essentially wiped out the yearly gains. This meant that entering the stock market at any point this year had already started incurring losses.
...
"Sir, this is a panic sell-off, we believe it's a chain reaction triggered by those investment portfolios. Our suggestion is to build positions slowly."
"Build positions? You sure? Ha-ha, be greedy when others are fearful, right? By the way, how's that old-timer doing?"
"Buffett got out quickly, selling off two days in advance. I must say, that's a miracle."
"Miracle? Ha-ha-ha, you crack me up, Filson. You think that treasury secretary's nonsense was spontaneous? That guy is just another actor."
William White laughed, though there was no humor in his expression. His disdain was palpable.
"Sir, there's a real possibility he violated multiple laws."
"Let them do as they wish. We'll keep a close eye on him, and we can respond appropriately. How much do you think he lost?"
"Even with his early sales, he still took quite a hit. Estimates are close to half a billion dollars."
"That's just a scratch. The real loss is mine."
Filson was at a loss for words. Despite Walmart's CEO losing billions on paper, it was still far less than William White's losses.
The reason was simple; William owned too many public companies. Especially NBC and Viking comics, those stocks had skyrocketed beforehand and now had plummeted by about 40%.
Though mere paper losses, William White was still very displeased. He didn't need to read tomorrow's news; he had a front-row seat to the disastrous losses that were his fate.
Buffett sure had good timing getting out early. If he had sold two weeks earlier, he would surely be considered a genius.
But, are there really geniuses in this world?
Maybe there are, but there certainly aren't any stock gods. That old man is, at best, a charlatan.
As for the true snakes in the grass, William White believed the stock market in September was nothing but abnormal. Those conspirators must have raked in a fortune.
These con artists were quite clever. However, fools were becoming rare. Did they really think they could keep fooling everyone forever?
"Sir, the risks of short selling are also pretty high. Should we cancel part of our hedge options?"
"No, let's cancel all of it by the end of this week, and immediately start the buyback plan to reclaim as many of my shares as possible."
"Sir, isn't that a bit risky?"
"Fortune favors the bold. Since I've missed the boat once, I might as well make a move again. I feel that tomorrow's dollar exchange rate might be unstable; you could short-sell a bit. Keep it short and sweet."
"Alright, sir. I'll handle it right away."
*****
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