Chapter 43 Investment Bank History

In fact, hedge funds and the self-operated departments of major investment banks are doing the most for stock index futures now, and most of the trading methods are programmatic trading, that is, building a trading model that automatically triggers orders when market prices fluctuate, and quickly conduct transactions in a timely manner, and then arbitrage profits from them.

However, the research on quantitative arbitrage is still in its infancy these years. The most famous arbitrage model "Medallion" has not yet appeared, and it is impossible for most hedge funds to hand over hundreds of millions of funds to quantitative models for management. Not many hedge funds have this size.

   It is the big international investment banks and the wealthy high-net-worth big clients behind them who are calling the shots in the futures market. These people have far less trust in the process than in the people who specialize in wealth management at the big investment banks.

Even so, there are still a lot of programmatic transactions in the market, especially when the stock market crashes, certain conditions in the model are automatically triggered, resulting in a large number of selling orders, which further deepens the panic of investors Emotion, which was also one of the reasons for being criticized later.

  At this time, the aroma of the hot pot in the trading room was overflowing, and all the ingredients were cooked, but everyone lost their appetite, and only looked at Zhong Shi with weird eyes.

Aware of the complex and weird expressions in the eyes of the people looking at him, Zhong Shi took out the fat beef from the hot pot, and greeted the people with a smile: "This is a good time to eat hot pot, the fragrance is completely transparent. Come out, what do you see me doing, why don’t you come over and continue eating?”

"At the price of 360 before, how did you know the bull's strategy, and the calculation is exactly the same as the facts. If you were not standing in front of us, I would suspect that you were operating!" Andrew sat at the table, watching the tumbling More than hot pot, said thoughtfully.

   "Didn't I tell you all about it? This is a tacit understanding of the long-term struggle of the bulls and the bears. Its purpose is to kill the entrants who follow them during the fluctuations."

   "In fact, if the previous bull hadn't placed an order quickly, I'm afraid they would also be the target of beheading."

   "As far as I know, there are very few people who can dance on the tip of this knife and have such a large amount of money. Just count the well-known consortiums in the world, and the answer will come out!"

"who is it?"

  As soon as they heard this sentence, everyone became interested and asked questions one after another.

   "Could it be those two investment banks?" On the contrary, Andrew said thoughtfully. Although he doesn't know much about the two companies' working styles, operating methods, and corporate culture, they are well-known, and anyone in the financial industry knows them well.

   "Yes, that's them!"

  ...

   Manhattan, New York, No. 85 Broadway, here is the headquarters of Goldman Sachs. Men and women in black suits and black briefcases came in or out, and their footsteps were always in such a hurry.

Looking at the towering Petronas Twin Towers in the distance, a middle-aged man on the middle floor of this brown building is holding a thick Cuban cigar in his hand. His handsome face is somewhat distorted in the rising smoke, and even Gritting teeth.

   "It's them again! Are they really better than us?" He murmured. Seeing his expression, the people around him all took a detour, and their steps became a little lighter.

  He is Ed Blanc, a senior partner at Goldman Sachs, in charge of the derivatives department. The fight against the S&P 500 just now in November came from his strategy.

Just when he successfully mobilized the morale of the short sellers and took the opportunity to close the empty orders in his hands, Damo suddenly came out from the slope, not only severely suppressed the morale of the short sellers, but also took the opportunity to push up the price. Presumably they must have made a lot of money by taking advantage of the low prices.

   "It's only a few seconds away, is it really insurmountable?" Thinking of the scene just now, Ed was furious. In fact, they also placed long orders, but they were slightly inferior in terms of time and price, and were seized by Morgan Stanley.

   In fact, Goldman Sachs also made a lot of money as the main short-seller before, but for Wall Street, where greed is a good thing, who would think it makes a lot of money!

In the 1970s and 1980s, Wall Street investment banks were synonymous with Morgan Stanley. Goldman Sachs was just one of several giants, far from reaching the status of the No. 1 investment bank in later generations. They not only fell behind Morgan Stanley, but also Behind investment banks such as Merrill Lynch, Lehman Brothers, and Salomon Brothers.

   With the help of European privatization, Goldman Sachs has gradually caught up in mergers and new share issuance. In fact, the privatization of Europe was also due to the harsh conditions offered by certain countries, and Morgan Stanley did not take over these businesses based on risk considerations, which gave Goldman Sachs an opportunity.

   "Is the bloodline really that important?" When Ed thought of these past events, his teeth itch with hatred. The British government's initial consideration was the Morgan consortium, which was inextricably linked with them, rather than other investment banks with a century-old history.

After entering the 1980s, there was a time when Morgan Stanley's business was stagnant, and it had to let go of its own figure, change its aristocratic characteristics, and become an unscrupulous money-making tool. When they acted as financial advisors for those malicious mergers, All of Wall Street was chanting: "That suave, confident Morgan has turned into an unscrupulous, offensive company."

In 1979, IBM had a bond of up to US$1 billion, which was the largest industrial loan in history at the time. IBM asked Morgan Stanley to accept it as a joint lead underwriter with Salomon Brothers, but within Morgan Stanley, all partnerships Everyone unanimously rejected this request, and IBM did not make any concessions. As a result, Salomon Brothers took the lead in issuing this bond. This was a milestone in Wall Street history, and Morgan Stanley's golden chain was broken.

   In order to retaliate against IBM, Morgan Stanley introduced its competitor Apple into the stock market.

In addition, Morgan Stanley changed its previous conservative style and entered the market in an extremely rough way. It is the leader in hostile mergers, it made junk bonds appear in the elegant hall, it even issued leveraged buyout funds, and There is more than one, participating institutions include General Motors, RB Trust Fund Corporation and a consortium in the Middle East.

   Goldman Sachs, whose reputation had been poor before, began to build up its own reputation just when Morgan Stanley was destroying its reputation and acting as the vanguard of hostile takeovers.

   On July 4, 1974, Morgan Stanley, on behalf of INCO, hostilely acquired ESB, the largest battery manufacturer in the world at the time, at a price of $20 per share. The boss of ESB Company had no choice but to seek advice from Goldman Sachs urgently. With the help of Goldman Sachs, INCO was finally acquired at a price of US$41 per share.

   Subsequently, Goldman Sachs announced that it would refuse to provide services to hostile takeovers. The hostile takeover and Goldman Sachs' public assurance had a positive impact on Goldman Sachs. Those companies that were afraid of hostile takeovers took Goldman Sachs as their lifeline.

  Goldman Sachs, which has a strong development momentum, has thus become one of the most influential companies on Wall Street, even slightly surpassing other investment banks.

However, in the fastest-growing fixed-income securities and derivative financial instrument business in the 1980s, Goldman Sachs was still unable to compare with its competitors. On the one hand, Goldman Sachs failed to foresee and lacked preparations; large, and therefore have not actively developed these businesses.

   It is no wonder that they frequently lose to Morgan Stanley, which is regarded as a strong competitor, in the futures market.

   At this time in the World Trade Center Tower, Morgan Stanley's derivatives department is rejoicing and clapping hands to celebrate. Taking advantage of the long orders absorbed at a low position, and then pulling up massive funds, after everything settled down, Morgan Stanley added millions of dollars of profits out of thin air.

   Most importantly, they beat another old rival in the market—Goldman Sachs.

Both being high-ranking members of the financial industry chain, Morgan Stanley and Goldman Sachs, which has a strong development momentum, undoubtedly have a bright complex. The two sides have overt or covert competition in various fields. The department has an absolute advantage.

"No, they don't invest much money in the derivatives department. How could they spend such a large amount today?" Sargent also lit a cigar, looked in the direction of Goldman Sachs headquarters, and said to himself Said.

   "Could it be?" Sargent frowned, and shouted loudly at the traders who were still celebrating wildly: "Has anyone noticed the movements of the RB consortium recently?"

"Sir, the RB consortium's capital investment in the stock market tends to decrease, and it has increased its efforts in hedging. It seems that they are also aware of the stock market bubble, but it is too late to withdraw!" A person wearing glasses, The staff member with a dull expression said.

Sargent knew him. His name was Mark Lurent. He was a trader who had just entered the derivatives department this year. In the product market, it is like a fish in water. In just half a year after joining the department, he was one of the traders who made the most profits.

   "Is there a possibility that the RB consortium entrusted Goldman Sachs to help manage the funds in the futures index, so as to reduce the risk?" Sargent frowned, thinking of a possibility.

"This is unlikely, right? The RB consortium has exclusive seats and channels. Wouldn't it be superfluous if it were to be faked by others? Besides, there are many experts in the RB consortium. Even if Goldman Sachs is entrusted, it can only be a part of it." Small consortium."

The person who spoke was an East Asian face. When he first came, his white colleagues generally regarded him as an RB, but he is a real Chinese. His surname is Jiang Mingmin, and he is also the most profitable trader in the derivatives department of Morgan Stanley. one.

   "Continue to reduce the position, the target is bullish, and at the same time, pay attention to slowly transfer the funds to the December contract." Sargent thought for a long time, but still had no clue, so he could only order so. (Please click, please recommend, please collect)

  (end of this chapter)