The Millennium Semiconductor Survival Guide.

Chapter 336 Newman’s pattern
Zhou Xin felt speechless for a while. Don't you want me to use my reputation to pay for your mistakes?Aren't you kidding me?
Am I still going to help you stand up and say that Bernard is fine, and why do you still need to trouble me to help you come up with a reason?
Not to mention that Zhou Xin has a God's perspective and knows that Madoff's hedge fund is a Ponzi scheme. Even if he doesn't know, there is no way he would waste his credibility to help others at this time.

As Baidu fell deeper and deeper into the pit of Madoff, Emerging Investments had sold almost all of Baidu's shares, leaving only a negligible share in its hands.

Because Zhou Xin is Baidu's earliest investor and Zhou Xin's reputation in Silicon Valley, Baidu still reserved a board seat for him.

Even so, it is impossible for Zhou Xin to stand up and speak out for Baidu.

Of course, the fire spread to NewPay, and Zhou Xin received a lot of @. Zhou Xin would not directly say that Madoff was a liar because there is no evidence yet.

Zhou Xin still wanted to say a few words: "I don't know what's going on with Madoff's hedge fund. The reason NewPay doesn't cooperate with Madoff is because the interest rates offered by Madoff's financial products are too high."

After Zhou Xin finished posting, he posted another long picture:

"I find that short Weibo cannot explain things clearly. In view of the unprecedented crisis faced by a series of financial products such as hedge funds, subprime mortgages, and real estate investment trusts, I would like to share my thoughts with you.

The first is why NewPay does not cooperate with Madoff.After the previous short Weibo post was posted, people may have misunderstood that Madoff’s interest rates were too high, which was abnormal.

I didn’t mean that. Not only does NewPay not cooperate with Madoff, we do not cooperate with any financial products with an interest rate above 5%. NewPay’s financial product service team will fully conduct a thorough review of every financial product that will be launched on the NewPay channel. Background checks and risk analysis.

We only open medium and low-risk financial products for the time being. NewPay needs to confirm the underlying assets of each financial product and its risk coefficient is within a controllable range.

Madoff's hedge fund is not in line with NewPay's business strategy, so we do not cooperate with Madoff.

Now comes the second question, why did Peter and I set such a business strategy for the NewPay financial channel?Will NewPay, which has always been radical in Internet financial innovation, be so conservative in financial management channels?

This question was asked by many board members at NewPay’s internal board of directors. I answered them this way because NewPay’s user base is too large and we are facing users across the United States.

These users lack the ability to identify risks in financial products. Even if they are marked with high risks, as long as the publicity is good enough, they will make blind decisions. If an accident occurs, they will pay for the accident.

For example, a certain financial product issued by a well-known financial institution claims that the interest rate is likely to exceed 8%, such as the two hedge funds that recently went bankrupt.

Users who lack the ability to identify risks will only see 8% returns and high probabilities, but will not notice the risks.

NewPay is an Internet financial institution. At the same time, we must take more responsibility and let NewPay help everyone isolate risks as much as possible.

The last question is whether the current financial crisis will have as big an impact as it did at the turn of the century. I think it will. "

After this long Weibo post was posted, a large number of anxious investors, especially those who had lost their principal due to purchasing financial products through Internet channels in the past, gave NewPay and Zhou Xin extremely high praise.

The two bankrupt hedge funds also sold their products on the Internet, and many investors bought them.

"You still have to look at Newman. This awareness is not comparable to that of other business managers."

“Social responsibility sounds easy to talk about. Many companies say they have to assume social responsibility, but how many actually do it?

Newman has been able to stand firm in Silicon Valley for so many years, both in terms of ability and character. "

When Peter Thiel was unwilling to cooperate with Madoff, Zhou Xin set such a strategic direction with Peter before leaving Silicon Valley. NewPay has always strictly controlled the products of financial management channels.

As a result, the market share in this area is very average, and both revenue and profit are not even as good as X.com.

As for WeChat Pay, WeChat Pay only has one currency fund similar to Yu’E Bao.

Fortunately, WeChat Pay has absolute control over Tencent Zhou Xin behind it.

This is not the case with NewPay. In order to expand, NewPay has introduced too many shareholders, and selling financial products is the fastest way for electronic payment companies to make money.

This has also led to NewPay’s sound business strategy being criticized. If it hadn’t been for the A/B share structure, Zhou Xin would have been sidelined by the board of directors.

As for why the 5% line was set, it was because if there were no restrictions, even if Peter held the same opinion as him, the risk management and control department might still cause trouble in private.

The reason why Baidu is deeply tied to Madoff is directly related to the fact that George Reyes secretly received Madoff's benefits.

The line set by NewPay determines that financial institutions have no incentive to buy NewPay's risk management department.

The 5% line also means that financial institutions have strict control over their underlying assets.

After Zhou Xin publicly responded, the Weibo post quickly spread among public opinion circles around the world, and everyone had different interpretations.

Professionals and the general public are paying attention to Zhou Xin's last words. He believes that the financial crisis is coming and will be more serious than the Nasdaq bubble burst in 2000.

No one in the industry dares to say that Zhou Xin doesn't understand finance.

At the turn of the century, Emerging Investments predicted in advance and purchased large quantities of S&P 500 Industrial Index constituents. This was later exposed in the industry, and Wall Street thought it was a stroke of genius.

As the scale of emerging investments grew larger, this investment institution, which mainly managed Zhou Xin's wealth, began to sell a large number of stocks in 2006 and instead purchased gold and long-term government bonds, making Wall Street financial institutions aware of Zhou Xin's wealth. Xin not only thinks so, but also does it.

To be honest, everyone knows that the crisis is coming, but no one can predict how serious the crisis will be and what the situation will be.

The act of buying a large amount of gold proves that Zhou Xin's prediction will be very pessimistic.

Investors who purchased high-yield financial products led by Madoff began to care about the underlying assets of the financial products they purchased.

Are there any subprime mortgage products that have been frequently exposed recently?

"As an industry insider, I represented Goldman Sachs before leaving Goldman Sachs and served as a board representative for NewPay. I can give you an internal estimate of ours at that time.

100 billion. NewPay loses 100 billion U.S. dollars every year by rejecting financial institutions that offer high commissions. John Thain said on Weibo. He was previously the president of Goldman Sachs, and now he has jumped to Merrill Lynch as CEO. He has always criticized NewPay for being conservative in financial products.

His speech further proved Zhou Xin’s pattern and ethics.

Zhou Xin's remarks further triggered a plunge in the stock market, with both American and Chinese stock markets recording their largest single-day declines since the millennium.

Zhou Xin's Weibo was like blowing the clarion call for a plunge in the capital market. The coldness of the stock market was further transmitted to other capital markets. The plunge in the stock market further made investors more suspicious of hedge funds.

Investors from Amerikan and around the world are surrounding the headquarters of Madoff's hedge funds and Baidu. They are demanding that Madoff disclose the underlying assets and reveal the specific financial situation.

The profit model of hedge funds lies in the model. You go long and short at the same time to ensure returns.To put it simply, you can't be completely short and half long. There will still be a bias. If you are more short than long, and then the market plummets, you will have a very considerable profit.

To give a very simple example, there is a type of fund that guesses whether the stock index will rise or fall the next day. If the stock index rises, Fund A's return is 7%. If the stock index falls, Fund A's return is 2%. This is very simple. Hedge fund case.

Madoff's ability to maintain above 12% for a long time required him to grasp the rise and fall of the stock market most of the time.

What's more important is that the assets he manages are as high as 6000 billion U.S. dollars. When the stock market plummets, he wants to earn an annualized return of 12%. He can only do short selling. Short selling requires a rival, which means he earns so much. More means that the company that competes with him will lose US$720 billion.

There are only so many companies that are qualified to compete with Madoff's hedge funds. There are many financial practitioners and professional institutions who buy Madoff's financial products.

The financial institutions of the original time and space include Golden Gate Asset Management, Spain's Banco Santander, HSBC Group, BNP Paribas, Nomura Securities, etc. Therefore, after the stock market plummeted, everyone began to inquire whether Madoff was short-selling.

The result is that no one knows which financial institution Madoff has shorted, there is no public information, and there is no private information either.

"Newman, you shouldn't have stood up and said this." Henry expressed his dissatisfaction to Zhou Xin through a cross-country phone call.

Henry is Henry Paulson. He has already gone from Goldman Sachs to serve as Treasury Secretary in the Nash administration. He only came here the year before last, and he encountered an unprecedented pitfall after working for more than a year.

Zhou Xin said: "Henry, you know me, I am a good person and I want to tell people a little bit of the truth, even just a little bit.

As I said on Weibo, ordinary people lack risk awareness and risk identification capabilities. Even in the midst of a financial crisis, they still have illusions or understand the world according to their own understanding.

The elites regard the flesh and blood of ordinary people as their own food for the winter, and light matches to make ordinary people have the illusion of winter. I just told them that it is winter now.

There is nothing wrong with this. "

Zhou Xin was very honest. He couldn't stand this kind of behavior for a long time because he also became rich by studying.

But after getting rich, this wealth only made him become the so-called middle class. In fact, he had extremely limited social resources.Because entrepreneurship has hit the mainstream of the times, there are many "upper-class people" coming and going around.

From the communication between these "upper-class people", Zhou Xin learned that although these people are still of the same species as ordinary people, the resources they control create an insurmountable barrier between them.

There is a saying that is very good, touching the interests of the upper class is like taking away their lives, changing the concepts of the lower class is like digging their ancestral graves, and the concepts of the lower class are the source of the wealth of the upper class. Those who try to explain all this are common to them. enemy.

The upper class uses various means to deceive the bottom class. After entering the era of self-media, there are many people who have peeked into the truth of the world and upper-class individuals who revealed these truths to the bottom class.

Zhou Xin is now trying to play this role.

Because of the phone call, Zhou Xin didn't know that Henry looked tired in the White House, which was at least ten years older than when he was at Goldman Sachs.

"Newman, if you tell people at the bottom that we are in a financial crisis, it will not help them make the right decisions. It will only make them more troubled."

Zhou Xin asked: "Henry, to be honest, are you in crisis now?"

Henry replied: "Yes."

He knew that he and Zhou Xin were in the same class, and everyone's information was shared. It was impossible for him to tell lies. This would be disrespectful to both the other party and himself.

Zhou Xin said: "I'm just telling the truth, I don't need to care if they will be troubled if they find out.

I know what you mean. The vast majority of ordinary people have no determination to cut their flesh. Even if they know that it is a financial crisis, they will not sell their stocks immediately, but will have illusions.

There are too few people whose actions and cognitions are consistent.But this is not a reason for us to hide the reality. The crisis has become more serious than ever. What we need to do is face the crisis. "

Henry sighed: "You are right, but the more people know, they may take some drastic actions, which will affect our rescue plan.

And you have affected a considerable number of investors who are trying to redeem the financial products they purchased, and the liquidity in the market will be further tightened. "

Zhou Xin smiled and said: "It seems that my words still have an effect."

Henry continued: “Especially with Madoff, we have reason to suspect that the Madoff hedge fund was a Ponzi scheme of unprecedented scale.

According to investigations by federal financial regulators, Madoff had never done any operations in his hedge funds until 2004. He simply deposited money in banks and used the principal to cash out so-called returns to investors.

He maintained this Ponzi scheme for 20 years, and the emergence of Internet finance helped him expand the scale of the Ponzi scheme tenfold again. This is terrible.

This will be an unprecedented crisis.

We need time to deal with this crisis and your comments leave us running out of time. ” Henry Paulson’s tone was full of frustration.

I don't know how serious consequences such a big bubble will have.

(End of this chapter)