Chapter 87 Borrowing five billion

  United States, New York.

  In the headquarters of the Quantum Fund, 38-year-old Stanley Druckenmiller was looking at a thick stack of analysis reports on the British economic situation, tapping the table in silence.

  Drukenmiller is at the helm of this fund and is thinking about whether he can find opportunities from the European Monetary System.

Ten years ago, the young man, who was only 28 years old at the time, founded Duquesne Capital Management Company. Four years later, a mutual fund invited him to manage several funds while running Duquesne Capital, one of which was It has risen by 40% in three months, making this young fund manager famous.

Druckenmiller still remembers a night in August 1989 when he flew between New York and Pittsburgh even though he was hired by Quantum Fund as one of twelve managers. Fly away, because there he also runs his own Duquesne fund. Then his bond position in the Quantum Fund was sold without his knowledge, much to his chagrin.

  He can't succeed with a boss who doubts his abilities. So he made a call to Soros, who was at the helm of Quantum Fund and the owner of the largest share, a celebrity on Wall Street.

   "You keep me tied up," Druckenmiller said aloud without hesitation, "I'm scared of being messed up in a situation like this, and I feel angry because I can do better!"

   "I want to leave." Druckenmiller finally said to Soros.

   Soros on the other end of the phone was silent, and made up his mind after a long time of consideration. "You don't go," Soros replied, "I'll go."

George Soros is the founder of Quantum Fund and the holder of the largest share of the fund. This Eastern European Jew is well-known on Wall Street. As early as the 1980s, he was a big shot on Wall Street. He once made a fortune in the British stock market. million dollars in profits.

And although Druckenmiller is a well-known fund manager, although he is called his clone by the latter because of his similarity to Soros in some respects, he left the fund he created and handed over the management rights to Soros. Such a junior is undoubtedly Soros' biggest adventure.

   But such a risk was worth it, and Druckenmiller quickly brought him amazing returns.

In 1989, Quantum Fund’s return was 31.5%, in 1990 it was 29.46%, and in 1991 it reached an astonishing 53.4%, making Soros the highest earner in the United States in one fell swoop, reaching $1.7 billion as much.

  Although in terms of division of labor, Druckenmiller is one of the twelve managers of Quantum Fund, in fact, he controls the entire company's operation process, and his internal position is second only to Soros.

  In recent years, due to the rapid growth of investment performance, the scale of Quantum Fund has also been increasing. By 1992, it had reached as much as 5 billion US dollars.

   "Stanley, have you seen that report?" The phone rang, and the voice over there was a little hoarse and a little excited.

   "Yes, this exchange rate system is problematic, and I'm still thinking about how to operate it!" Druckenmiller said absently, looking at the report in his hand.

  The reason why he said this is because in his vision, the opportunity for arbitrage has not yet appeared. In fact, he does not know when it will appear, so he can only speak in such a general way.

   "Stanley, you are also an expert in the German market. What do you think about the future economic trend of Germany?"

   "It is unlikely to cut interest rates in the short term. After all, the united Germany still has many problems to solve." Druckenmiller frowned, as if he wanted to understand something.

  He knew that the person on the phone had thought about it with him, but what Druckenmiller was not sure about was how he could foresee the time of the incident.

   "You must be thinking that, right?" The person on the phone was not surprised, and also thought of Druckenmiller.

   "That's right, I think... no, no, you don't want to... attack the pound!" Druckenmiller was confused at first, and then thought of a possibility.

   "Why is it impossible, Stanley?" Soros on the other end of the phone asked back, "Do you remember the matter of Mark's position?"

That was shortly after Druckenmiller took office. Because he was not optimistic about the US dollar, he established a large number of positions of shorting the US dollar and buying the German mark. When the mark appreciated and the US dollar depreciated, these positions began to make profits. Soros asked him: "How big a position have you established?" Druckenmiller said triumphantly at the time: "One billion dollars!" Who would have thought that Soros would say disdainfully: "This is also called a position?"

   One sentence hit Druckenmiller hard. Later, under Soros's suggestion, Druckenmiller doubled the position, which used almost all the funds of Quantum Fund at that time.

  Since then, one of the tenets that Druckenmiller has gotten the most from Soros is: the right or wrong direction of the operation is not important, what matters is how much you earn when the direction is right, and how much you lose when you are wrong. In other words, it is about maximizing profits when the direction is right.

"Once you have extreme confidence in a certain transaction, you should hold on to the opportunity by the throat, just like a pig." "You must have the courage to be a pig." Druckenmiller looked at the one on the desk called "" Jeremy's yellow ceramic pig fell silent.

  This time is different from usual. In the past, whether it was the bond market, the exchange rate market or the stock market, the central bank would not intervene, because this is a normal investment behavior. But to attack the pound, this is an act of affecting the exchange rate, and the central bank will definitely intervene.

Thinking of the Bank of England's foreign exchange reserves, Druckenmiller felt a little chilled. The dollar assets owned by the Central Bank of England are definitely several times the size of the Quantum Fund Company. Even in the event of an attack, they can adjust the interbank The overnight interest rate on borrowing to discourage the sale of sterling.

"Stanley, I know what you're thinking, but you've overlooked one very important point." The voice on the phone didn't fall silent because of this, but instead gave a reason that Druckenmiller didn't even think of. .

   "I was the person who made the most money in the market last year, so the market will be watching how I will operate!" Soros said proudly.

Yes, the market has always had the habit of following suit, especially when certain star hedge fund managers have achieved huge performance, market participants tend to take him as the leader and follow him, this is the herd effect .

"if it is like this…"

  Drukenmiller was silent. If the funds in the market can be united, there might be a battle with the Bank of England. His mind was spinning rapidly, thinking about the feasibility of this plan and its subsequent impact.

   "In addition to these, we may need to borrow some money?" The voice on the phone continued.

   "Borrowing money, what kind of money are you borrowing?" Druckenmiller couldn't help but asked back, unable to react for a while.

   "I plan to use my own fund as part of the mortgage to borrow the same share of cash from the bank, so that we will have about 10 billion US dollars of funds to operate!" Soros said lightly on the other end of the phone.

"what?"

  Although Soros's share occupies a large part of the Quantum Fund, the other part belongs to other customers after all. If it is mortgaged like this, it may not be very good.

  Actually, this is a simple financing, but it is a bit troublesome because some of the funds in the Quantum Fund do not belong to the managers.

   "The client..." Druckenmiller was a little at a loss, he didn't know if such behavior violated professional ethics.

"Stanley, remember, our greatest professional ethics is to help customers make profits. The means are not important at all, do you understand? Remember, be like a pig!" The pig he said means that once you have confidence in the transaction, We must hold on tightly.

   "There are still many details to discuss about this matter. I will arrange a meeting as soon as possible to discuss the relevant content, and I will report the content to you later."

   "Okay, Stanley, let's move on." The phone hung up.

Soon, the news that Quantum Fund, whose income reached 50% last year, had borrowed a huge sum of US$5 billion spread throughout the hedge fund industry. Chance.

Quantum Fund is not the only one who has discovered the problem of the European monetary system. In fact, many hedge funds on Wall Street have discovered this problem. However, with the scale of funds they manage, they cannot shake the position of the pound at all. When they heard that Soros’ Quantum Fund borrowed After the capital of 5 billion U.S. dollars, many people have realized that Soros is likely to take action against one or even several currencies in the European monetary system.

Golden opportunity.

Many hedge funds and international capital began to set their sights on Europe. They gradually cleared their positions in other areas, transferred cash to Europe, and kept an eye on the exchange rates of several currencies against the US dollar. Countless information will be reflected.

   "They're going to attack the lira and the pound!" Another big name on Wall Street, Julian Robertson, head of Tiger Fund, is listening to his analysts.

At this moment, in the large conference room, most of the analysts present had red eyes. After receiving the news of the Quantum Fund’s fundraising, these elites began to analyze which currency would be the target of the attack. After integrating politics, After considering various factors such as the economy, they came to such a conclusion.

   Yes, the mark is indestructible, and so is the franc. If it is the currency of several other countries, such a large amount is not needed, and among the more than a dozen member states, the economies of countries such as the United Kingdom and Italy are in a downturn, and they urgently need to revive their economies. (Thank you for the review votes from the book friend The General in the Sunset! At the same time, I also hope that more and more friends will support this book, please ask Sanjiang votes, thank you!)

  (end of this chapter)