The Conglomerate Family Became A Villain [EN]: Chapter 243

243. The Sun is Rising (1)

The last trading day of 1986.

The atmosphere at the New York Stock Exchange was electric, a mix of excitement and apprehension.

“Wow, quite a spectacle today, isn’t it?”

“You mean the bulls versus the bears? [Bulls bet on the rise, bears on the fall.]”

“Which side do you think will win?”

“Hmm, my money’s on the bulls.”

Dealers were sharply divided, some betting on the market’s continued ascent, others predicting a downturn.

“Isn’t December supposed to be a Santa Rally, where everything goes up?”

“Not this year. Not everyone’s buying the hype.”

“Someone went short? [Betting that a stock’s price will decrease.]”

“Not me, but looks like there are a few bears on the left.”

The dealer betting on the rise glanced over and noticed several middle-aged men with worried expressions.

“It’s Tom.”

“Jack too.”

The reasoning of those betting on a fall was straightforward.

Stocks had risen too rapidly in 1986.

Only IBM, the market capitalization leader last year, had seen its stock price decline. Currently, Victoria Corporation, the top company in market capitalization, and Microsoft, which had gone public this year and become a major force in the IT industry, had experienced significant stock price increases.

“IT’s overvalued, isn’t it?”

“Definitely. Victoria Corporation and Microsoft are leading the charge.”

“If you include Apple and Intel…”

“The bubble isn’t just in Japan.”

Many American dealers and fund managers believed the IT industry was trading at inflated prices, while traditional giants like ExxonMobil and Heinz were undervalued.

“Still, looks like it’s going to rise today.”

“It’s a bitter December.”

“Bitter even with the Santa Rally?”

“Feels like we partied with credit cards.”

Those with a more cautious outlook sighed, feeling the U.S. stock market was detached from reality.

Such sentiments were also present at Victoria Fund.

“Shouldn’t we start scaling back our positions soon?”

The one voicing this concern was Jeremy Spin, the COO of Victoria Fund.

“Jeremy, isn’t the party just getting started?”

John Pierre, a fund manager who had favored stable investments during his time at JP Morgan, had undergone a transformation after joining Victoria Fund.

He had become an aggressive, risk-taking investor.

Of course, this change was largely due to the influence of Jeong Hyun-woo, the owner of Victoria Fund.

“The party is just starting now? The party itself is a problem.”

John Pierre sighed softly.

“Hoo… What happened to Damon when he thought that way?”

He was referring to Damon Ferman’s disastrous short-selling venture.

“Damon failed because he was too impatient. Had he waited, he wouldn’t have crashed and burned like that.”

John Pierre raised his eyebrows.

“Are you saying… his judgment wasn’t entirely wrong?”

“I’m not defending Damon. Some of his reasoning was flawed, but he also had some valid points.”

John Pierre frowned at Jeremy Spin’s response.

“Wrong in some ways, right in others. I’d like to hear the specifics.”

The two men were essentially the operational leaders of Victoria Fund.

If their opinions diverged significantly, Jeong Hyun-woo would inevitably have to step in.

“The valid point is that the current market is overvalued.”

John Pierre simply asked, without challenging his statement.

“What’s the flawed part?”

“The assumption that stock prices will fall immediately.”

While stock prices were inflated, it would take time for the bubble to burst.

That was Jeremy Spin’s calculation.

“Then how long do you think it will take for the stock prices to fall?”

“Even if I’m being conservative, it will happen within three years.”

“Hmm, if it’s three years, isn’t there still plenty of time to profit?”

Jeremy Spin shook his head.

“Not necessarily. We need to start preparing to exit now, so we’re in a safe position in three years.”

He didn’t want to jump out of the plane without a parachute.

‘Asset transfer isn’t that simple.’

The larger the asset, the more challenging it became to move it.

This was because a massive asset shift would cause the exiting side to shrink rapidly and the entering side to swell, creating a bubble.

Of course, John Pierre understood this basic principle. He was a respected figure from his time at JP Morgan.

“Let’s withdraw 30% each year?”

“That’s ideal, but if it’s not feasible, we’ll have to adjust the percentages to 20%, 30%, and 50%.”

John Pierre listened to Jeremy Spin’s words and nodded slowly.

“I’ll try to persuade Charlie.”

He also felt that the current U.S. stock market resembled a reckless party.

‘Interest rate cuts are beneficial, but you never know when another war will erupt in the Middle East.’

If the Fifth Middle East War broke out, oil prices would skyrocket again, and the Federal Reserve Board would likely raise the base interest rate above 5%.

“John, I’m counting on you.”

He offered his friend and superior, John Pierre, sincere advice before rising from his seat.

“Jeremy.”

Jeremy Spin turned his head and asked.

“John, is there anything else I need to do this year?”

Today was their last day of work for the year.

John Pierre smiled and raised his voice.

“Happy New Year!”

Jeremy Spin turned to acknowledge the New Year’s greeting and raised his right hand.

“John, see you next year.”

This concluded their meeting for the year. But John Pierre’s work wasn’t finished. He picked up the phone and said to his secretary.

“Connect me to Charlie.”

“Yes, sir.”

A dial tone sounded as the secretary responded.

* * *

Jeong Hyun-woo and John Pierre frequently spoke on the phone.

Today was no exception.

John Pierre called Boston to get Jeong Hyun-woo’s perspective.

However, Jeong Hyun-woo’s views differed from his. He told John Pierre that if it was more than just a simple greeting, he would meet him in New York.

John Pierre hung up the phone and sighed deeply.

“Hoo… I thought my vacation started this afternoon.”

Jeong Hyun-woo was coming to New York.

Even if he arrived today, it meant the vacation would start tomorrow.

5 hours later.

New York Central Park.

Jeong Hyun-woo and John Pierre were strolling through the snow-free park, engaged in conversation.

Of course, bodyguards with concealed weapons were nearby.

John Pierre didn’t see Sarah and asked teasingly.

“Didn’t Miss Hilton come with you?”

Jeong Hyun-woo answered matter-of-factly.

“Sarah is preparing a party in Boston.”

“You’re having a party in Boston?”

“I’m hosting a year-end party with acquaintances since we moved. Would you like to join us, John?”

John Pierre waved his right hand.

“I have a party planned with my family.”

“I see.”

It was unusual for a New Yorker to travel to Boston for a year-end party.

If Jeong Hyun-woo and Sarah hadn’t relocated, they might have spent the end of the year in the vibrant atmosphere of New York.

“So much happened this year.”

Jeong Hyun-woo agreed wholeheartedly.

“That’s right. We were busy from the start.”

They had celebrated the New Year in Japan this year.

“And we made a lot of money.”

Jeong Hyun-woo was already a prominent figure last year, but it paled in comparison to this year.

This year, Jeong Hyun-woo had risen to become one of the wealthiest individuals in the United States, on par with the world’s elite.

“Charlie, how does it feel?”

John Pierre’s assets had also increased significantly, but his status hadn’t risen as dramatically as Jeong Hyun-woo’s.

“Well… I don’t really feel the wealth in stocks.”

The market capitalization of a company could decline at any time.

That was his perspective.

‘Is this what it feels like to be floating on a cloud?’

He was certainly at a high level, but it didn’t feel like he had solid footing.

John Pierre asked cautiously.

“Charlie, are you considering selling your stock?”

There was a common saying among stock investors that unrealized profits weren’t truly profits.

Of course, this statement emphasized the volatility of stocks, so seasoned investors avoided such language.

Jeong Hyun-woo interpreted John Pierre’s suggestion as a way to solidify asset growth through cash conversion.

“I’m not thinking about it yet.”

John Pierre found his answer predictable.

‘Charlie has no reason to liquidate his shares.’

He said, gazing at the setting sun in the west.

“Jeremy mentioned today that the bubble in the U.S. stock market is growing.”

“Are you saying there’s a bubble in the U.S. stock market too?”

“That’s right. Jeremy believes the rise in the U.S. stock market is abnormal, though not as extreme as in Japan.”

Jeong Hyun-woo asked John Pierre.

“Do you agree with that assessment, John?”

John Pierre sighed briefly.

“Hoo…”

It indicated a difficult question.

“You agree.”

John Pierre spoke hesitantly.

“I partially agree.”

Jeong Hyun-woo believed that both John Pierre and Jeremy Spin had good instincts.

‘There were those who warned about the IT bubble before it burst.’

He asked in a cheerful tone.

“Are you suggesting we should exit before the bubble bursts?”

John Pierre responded to Jeong Hyun-woo’s question.

“That’s the best investment strategy.”

The best investment is avoiding losses.

That was what one of his economics professors had told his students in college.

‘But all investments carry risks, and the only risk-free investment is a bank deposit.’

To a fund manager, bank interest was incredibly boring.

“I don’t think John needs to worry.”

John Pierre didn’t think he needed to liquidate 20-30% of his shares like Jeremy Spin. But he thought it would be wise to cash out at least a small portion.

“You don’t need to worry? What do you mean?”

Jeong Hyun-woo replied.

“Because the bubble in the U.S. stock market won’t burst before the bubble in the Japanese stock market.”

John Pierre couldn’t disagree.

‘That’s right.’

He nodded and said.

“I think that’s accurate.”

Jeong Hyun-woo asked him.

“When will the Japanese bubble burst?”

John Pierre couldn’t answer immediately. The collapse of the Japanese stock market was difficult to imagine in December 1986.

“I don’t think it will be next year, at least.”

Jeong Hyun-woo smiled.

“That’s right. It won’t be next year.”

“Then will it be the year after next?”

“It will last for three more years. The investment fever is that intense.”

The Japanese stock market could continue for three more years. That meant the U.S. stock market wouldn’t decline within three years either.

“You’re saying the boom will last for more than three years.”

Jeong Hyun-woo said as he walked ahead.

“It’s just a theory. Reality might be different.”

John Pierre was planning to retire when the Japanese investment boom ended.

‘If the U.S. bubble bursts after the Japanese bubble… I don’t need to worry.’

His tense expression relaxed.

“I always get answers when I meet Charlie.”

Jeong Hyun-woo said without turning around.

“I’m not a counselor.”

“You’re like a counselor to me.”

Jeong Hyun-woo turned toward the path next to the lake and asked.

“So, what’s the profit this year?”

John Pierre had projected an expected profit of 700%.

“It’s 720%.”

“Exceeded expectations?”

Victoria Fund had achieved astronomical returns this year, earning over $22 billion.

“I don’t know if it will be this good next year.”

Jeong Hyun-woo asked him.

“Is this year’s return based on the $3 billion invested this year?”

John Pierre followed him and answered.

“That’s right. It was calculated based on the $3 billion invested this year.”

“Then what will happen next year?”

“Next year, we can use the $25 billion as the base, which is the sum of the $3 billion invested this year and the $22 billion in profits.”

Jeong Hyun-woo stopped walking and said.

“Then next year’s return will drop significantly.”

John Pierre wasn’t surprised. He, of course, and Japanese investors also knew that maintaining the current astronomical returns would be difficult.

‘If we achieve 700% next year, Victoria Fund’s assets will grow to $175 billion.’

$175 billion.

This was a massive sum that could secure controlling stakes in the world’s top 1, 2, and 3 companies in terms of market capitalization.

“I think it would be a success if we could make just a 20% profit next year.”

20% of $25 billion was $5 billion.

This was a figure that far exceeded 150% of the initial investment of $3 billion.

“We’ll still earn $10 billion.”

John Pierre picked up on Jeong Hyun-woo’s words.

“Charlie seems to think that 50% growth is possible next year.”

Jeong Hyun-woo started walking again and said.

“Maybe we can earn more than that.”

John Pierre felt a chill in his chest.

“Isn’t that too much?”

“Is it too much?”

“Even if the Japanese real estate market is hot, it can’t rise by 50% a year.”

John Pierre thought this year was an anomaly.

However, Jeong Hyun-woo knew that the Japanese real estate bubble hadn’t truly begun yet.

‘It’s not yet at the point where you can sell Tokyo and buy the entire United States.’

He turned toward the park exit and raised his voice.

“Shall we make a bet?”

John Pierre didn’t particularly enjoy betting. Besides, his opponent was Jeong Hyun-woo, who seemed to have Lady Luck on his side.

“I’ll pass.”

Jeong Hyun-woo shrugged and said.

“That’s no fun.”

“I can’t be a sacrifice for Charlie’s amusement.”

“If you say that… doesn’t it make me seem like a cruel person to those around me?”

The bodyguards were walking a distance away, so they couldn’t clearly hear their conversation.

“Charlie, I don’t tend to fight battles I can’t win.”

The two men’s conversation was interrupted by the appearance of family tourists.

Central Park was a large park, but it was also heavily used, so it wasn’t exactly quiet.

As people passed by, Jeong Hyun-woo spoke again.

“Aren’t you curious about the bet?”

John Pierre answered nonchalantly.

“Isn’t it a bet that Charlie wins?”

Jeong Hyun-woo shook his head and answered.

“I think bets should be enjoyable, win or lose.”

“Is it a close bet?”

“That’s right.”

John Pierre said in a strained voice.

“Either way, isn’t it a bet that Charlie can win by a narrow margin?”

Jeong Hyun-woo raised his voice as if to object.

“What if we bet on a 100% return on Victoria Fund next year? Is it still a close win?”

A 100% return.

For Victoria Fund to achieve a 100% return, it would have to earn more than $25 billion next year.

‘$25 billion is enough to buy McDonald’s and Pepsi Cola and still have money left over.’

Money left over even after acquiring massive companies, not just mansions or land.

Could such a feat be possible in Japan in just one year?

If it were, everyone would be rushing to invest in Japan.

‘Could it be!’

John Pierre suddenly understood Jeong Hyun-woo’s intention.

“Charlie, could it be?”

Jeong Hyun-woo tilted his head and asked.

“What could it be?”

John Pierre answered with conviction.

“If many companies invest in Japan after seeing our performance last year, the bubble will grow even bigger…”

“That bubble will further increase our profits. Are you suggesting that I knew that and proposed a 100% return?”

John Pierre answered firmly.

“That’s what I believe.”

Jeong Hyun-woo shook his right hand and said.

“I didn’t think that far ahead. I was simply suggesting a bet. I believe that bets shouldn’t leave you feeling bitter, regardless of the outcome.”

If it’s a 100% return…

You won’t feel bad whether you win or lose.

That was Jeong Hyun-woo’s reasoning.

John Pierre followed him and said.

“I see. But if many investors follow our lead, it will definitely have an impact.”

He felt it was necessary to revise the investment return target for next year upwards.