If a boulder rolls down a mountain, and everyone desperately blocks it with planks, each person will only suffer minor injuries, but not life-threatening danger. If they turn and run, the person in front will be unscathed, but the person behind will be crushed and killed.
What would you choose?
Others may not know, but if it were Goldman Sachs, the choice would be obvious...
Another point is that the market initially believed that every subprime mortgage debt obligation (CDO) had a corresponding default insurance policy (CDS). However, in the end, it was discovered that in order to sell more CDS, the same subprime loan might be insured with three, four, or even more default insurance policies with insurance companies...
So, only the Black Swan Fund knows the most about this now—they have the most CDS default insurance. This is still a matter of jumping the gun. After the mortgage defaults, whoever first asks the insurance company or related agency for compensation will have the best chance of receiving the funds...
And when the insurance company realizes that it can't possibly pay out the full amount, it is most likely to go bankrupt.
As for the Black Swan Fund, because it already had so many CDS, it didn't need to wait until all of its default insurance policies were fully activated before seeking compensation from insurance companies. A simple calculation showed they knew it would be difficult for the insurance companies to fully cover their default insurance. They simply needed to sell it to investment banks that needed it at high prices before then.
...
On August 20, the day after the Black Swan Fund and Morgan Stanley reached a "friendship," Chris, Countess of Bute, gave birth to a baby boy in London.
As previously named, he became Daniel Bute, the sixth member of the Countess of Bute's family.
Barron held little Daniel in his arms. He could vaguely make out his hair, a light blond, distinct from the dark hue of Count Bute and Chrissy's flaxen hair.
Looking at the four other children playing on the carpet, Barron couldn't help but sigh to Bonnie beside him:
"Having so many children makes our home feel warmer, honey. Perhaps we should try harder..."
But before he finished speaking, Bonnie couldn't help but roll her eyes.
What's the point?
I just want everyone to feel a little more warm.
"Barron, I don't want this to happen again. I'm going crazy with boredom. I'm planning a trip soon. I don't want to spend all my time taking care of children..."
The Countess said to Barron through gritted teeth.
Well, postpartum mood swings are understandable. Barron responded with a warm attitude:
"You've been working hard lately, ma'am. How about we go to America together sometime?"
"That's great. We could also visit Latin America..."
But then again, did you spend so much time taking care of the children before? It seems like all of this has been left to the maids...
So Barron said,
"Dear Chris, Hawaii is actually quite nice, with a pleasant climate. We could also go and buy a small island there and go on vacation when we have time. But we can wait a little over a month. By then, the weather in London will be colder, and little Daniel will be a little older, so we can take him out with us."
...
"Nvidia's stock price is over $30 now. Is it time to sell?" Catherine Neville had just returned to London with her children from their estate in the south of France. After Barron had enjoyed some quality time with his daughter, Emily Neville, and had the maids put the children to bed, it was time for him to study with Catherine, the former Mrs. Hall and, even earlier, his elder brother's fiancée.
Earlier, following Barron's advice, Catherine had used the £50 million she had received from the sale of her Hall Bank shares to the Hall family to purchase approximately 15 million shares of Nvidia.
At the time, Nvidia's stock price was less than $6.50, but now it has more than quadrupled to over $30.
At that price, Catherine's holdings are now worth over $450 million.
"I think it still has room to rise, so there's no need to rush to sell. Well, you can start selling slowly in early October, and then let Daisy help you."
Baron said this because he knew that in his previous life, on October 18th of this year, Nvidia's stock price would reach its pre-subprime mortgage crisis high of $37, before continuing to decline due to the impact of the subprime mortgage crisis.
While the specific price may vary slightly due to minor changes in time and space, the overall trend will not be much different.
Similarly, DS Group also holds more Nvidia shares. Some of them were acquired before Catherine purchased Nvidia shares, and some were purchased from Vanguard. Baron currently holds over 25% of Nvidia shares.
12% of this is held by Caesars Fund, which was acquired by exchanging some of its shares in United Energy Group for Vanguard.
Rich23 Capital purchased over 13% of the remaining shares from institutions and the secondary stock market.
In the near future, they will also gradually reduce their Nvidia holdings, ultimately reducing their total holdings by approximately 5%, maintaining their stake at around 20%.
Of course, once the subprime mortgage crisis impacts the stock market, Nvidia's stock price will likely fall to as low as one-seventh of its October high. At that point, these funds will be used to repurchase Nvidia shares. Ideally, this will recoup the shares sold several times over.
Of course, in practice, this calculation is not straightforward, as price fluctuations caused by the purchase of outstanding shares must also be considered. However, it should be fairly easy for Baron to increase his Nvidia stake from the current 25% to over 40%.
Nvidia's shares are already highly dispersed, with a high float.
This is simply part of the various buy-low-sell-high strategies employed by Baron's companies in the stock market during this period.
"But you mentioned shorting Northern Rock Bank. Their stock hasn't dropped much yet. Do you want to continue?"
Speaking of which, Catherine's knowledge of finance, or business in general, was limited. All of her investments were based on Barron's advice.
So, after seeing that Northern Rock Bank's stock price hadn't fallen much, it was natural for her to have some doubts.
"Don't worry about it. For now, just treat it as a risk hedge against your Northern Rock Bank shares. It'll only cost a small fee."
The reason Northern Rock Bank's stock price hadn't started to fall was, on the one hand, because the subprime mortgage crisis was only in its first phase and hadn't yet spread to banks, or European banks in particular.
On the other hand, it was because Barron hadn't yet started a large-scale shorting of Northern Rock Bank...