Chapter 436 Madman or Genius?

Wu Ruohan made an appointment with Professor Qin to have dinner together in the hotel at 6:30 in the evening.

At 6 o'clock in the evening, Gao Yang, dressed in formal attire, and Wu Ruohan, who was dressed as an OL, were at the east gate of Jiaotong University, waiting for a strange person that few outside the circle knew, the world's top financial quantification expert, Professor Qin Xianglin.

After waiting for about 10 minutes, a man wearing a dark suit, tie, and round-rimmed glasses, about 172 centimeters tall, and looking about 40 years old, walked out of the school gate.

Wu Ruohan put her arm around Gao Yang and greeted him with a smile on her face: "Hello Professor Qin, this is my boyfriend, Gao Yang, the founder of 51 Group."

Gao Yang stretched out his hand and shook it warmly: "Hello, Professor Qin, I'm sorry to bother you."

Professor Qin was very easy-going: "Mr. Gao, you're welcome."

Gao Yang hurriedly said: "Professor Qin, just call me by my name. I don't dare to act like a gentleman in front of you."

Professor Qin just smiled slightly.

Gao Yang and the other two led Professor Qin to two Mercedes-Benz E-class cars. Shao Hanyun, who was beside the car, opened the door and accompanied Professor Qin in a car.

A few minutes later, two cars drove into the Crowne Plaza Hotel, plus two security guards, a man and a woman, and six people dined in a private room.

During the meal, Wu Ruohan introduced the current development of 51 Group, and Gao Yang also made some additions.

Professor Qin smiled, listened carefully, and occasionally made a few comments.

This is a person who is easy-going, not too sharp, and has a relatively low-key attitude.

The image of an ordinary scholar.

After the meal, they moved to the tea room. Gao Yang personally brewed a pot of Pu'er tea, and the four of them drank tea around the tea table.

Gao Yang personally served a cup of tea: "Professor Qin, we are interrupting this time because of the U.S. subprime mortgage market. I would like to ask you to give me some advice..."

Wu Ruohan immediately handed over a piece of information: "Professor Qin, this is data from the real estate market and subprime mortgage market that we have been tracking in the United States for more than a year. The deadline is September 30 this year."

Professor Qin was very surprised when he heard this. He took the information and read it carefully.

Gradually, Professor Qin's expression changed from surprise to shock.

After reading, Professor Qin looked up at Gao Yang: "Gao Yang, Ruohan, do you plan to short U.S. subprime loans?"

Gao Yang nodded: "Yes, Professor Qin, we have such a plan."

Professor Qin looked puzzled: "Judging from the tracking information you provided, it is very detailed. We also conducted a very in-depth field investigation into the default situation of real estate mortgage loans in the United States.

I don’t quite understand why you could foresee that the U.S. real estate market would overheat and arrange follow-up investigations in advance?”

Gao Yang said: "Professor Qin, I work in business, and I pay more attention to macroeconomics and cyclical matters.

I have read some books on business cycles.

For example, there is the Campo cycle discussed by the Russian economist Kondratieff, and even earlier, the Jugra cycle proposed by the French economist Jugra in the mid-19th century.

The Compo cycle is a study of large cycles that cycle every fifty or sixty years. In contrast, I am more interested in the Jugla cycle of 9 to 10 years.

In fact, I don’t know much about these advanced business cycle theories, but there is history to compare and verify.

According to Jugra's research, a complete Jugra cycle lasts for 9 to 10 years.

By coincidence, I found out that in 1987, a famous financial crisis occurred in the United States.

On October 19, 1987, the U.S. stock market experienced the famous Black Monday again. The stock market suddenly crashed, and many blue-chip stocks plummeted by more than 30% in one day.

Ten years later, in 1997, the Asian financial crisis occurred again, which lasted until 1998.

Now, it’s almost another 10 years.

Ruohan has a cousin named Wu Fei, who has a PhD in economics from Columbia University and teaches at Columbia University.

Last year, brother Wu Fei and his family returned to China to visit relatives, and we accidentally talked about the real estate market in China and the United States.

At that time, Brother Wu Fei said that the U.S. real estate market had entered a new cycle because one of your famous early papers, Professor Qin, was discovered by Wall Street. Then Wall Street’s investment banks designed the CDO type based on your theoretical model.

Asset securitization products.

CDOs have fueled the boom in the U.S. real estate market and the rapid expansion of the MBS market, attracting countless capital inflows.

Coincidentally, I have been investing in A-shares since 1999, and experienced a bull market from mid-2001 to the middle of 2001, and then a five-year bear market.

My experience in investing in the stock market is that in places with many people and overheated capital inflows, there will always be a sudden collapse when the market is at its busiest.

At that time, I was communicating with my elder brother and remembered the Jugra Cycle. When I heard him talk about the prosperity of the U.S. real estate market driven by CDOs and MBS, I was thinking that if this continues, the U.S. real estate market will become overheated in investment.

Is there any risk of collapse?

Therefore, I entrusted my elder brother and my sister-in-law, who works in a Wall Street investment bank, to start tracking and investigating the development of the US real estate market and the MBS market.

At that time, it was just a hunch and a guess, and I wanted to see if it could be verified through follow-up investigations.

Unexpectedly, after more than a year of tracking, my hunch has been initially verified.

Now, the development of mortgage loans in the U.S. real estate market, as well as the scale of the MBS market, are somewhat astonishing in terms of disorder, chaos and overheating.

I feel that if this continues, the phenomenon of the Jugra cycle is very likely to reappear. The direction of the market collapse lies in the disorderly development and crazy expansion of MBS.

However, we are not familiar with these complex derivatives in the U.S. financial market, their trading patterns, how to seize opportunities when they arise, and what suitable investment tools and channels are available.

Professor Qin happens to be a first-class expert in this field, and the CDO created by Wall Street was designed and constructed based on your research paper.

Therefore, today we take the liberty of interrupting and asking Professor Qin to give some advice..."

The concepts Gao Yang talked about were not actually professional. For Professor Qin, this was just a directional and general talk.

However, Professor Qin was so shocked by Gao Yang's words that his eyes nearly dropped.

Based on a Jugra cycle and combined with stock market investment experience, Gao Yang suddenly came up with the idea that the new round of prosperity in the U.S. real estate market might hide huge financial risks.

Then, put it into practice and arrange for personnel to conduct long-term follow-up investigations.

A person who is not professional and doesn't know much about the U.S. financial market saw the nature of the bubble in the market at a glance.

In Professor Qin's eyes, Gao Yang's idea is crazy and genius.

In three or four years, a young man from the 51 Group has been developed. Does he have any special abilities?

Professor Qin suddenly asked: "Gao Yang, you said you have been investing in A-shares for 7 years. What are the specific returns?"

Gao Yang said: "In my personal name, it was in late October 1999. I opened an account and entered the market with 28,000 yuan. I remember this very clearly.

Over the years, I have successively added positions and invested approximately 10 million in funds. So far, the total income from the entire position has been approximately 25 times.

Because it is basically a medium- to long-term investment, there has never been a loss on a single stock..."

Professor Qin was stunned. He didn't expect that such a well-known Internet entrepreneur is really an investment genius. No wonder he is so confident in his plan to short the US subprime mortgage market...
Chapter completed!