Unknown to Sakata, today's Zhongshi not only had a bountiful harvest but also forced out a major player lurking in the market to a large extent.
"Who could it be? Or perhaps some institution that is shorting the stock market?" Sitting in the Mercedes on the way back to Shallow Water Bay, Zhongshi was deeply pondering.
The Mercedes was a newly purchased vehicle for daily use, while the exorbitantly priced Porsche had yet to be delivered. Zhongshi had to buy a relatively "ordinary" Mercedes commercial van for his outings.
Similar to the future, the Mercedes at this time was also considered a high-end and prestigious car model, and few ordinary people could afford to buy a Mercedes just for daily use.
As for even more luxurious cars like Rolls-Royce, Zhongshi did not like this antique-styled car, despite each Rolls-Royce being handcrafted and being the designated car for the British royal family.
Some European countries have a tradition of nobility, especially the United Kingdom, which has always been a constitutional monarchy. The royal family still retains the status of head of state in the constitution, and the British army, according to the constitution, is loyal to the Queen.
However, with the presence of the Prime Minister and the upper and lower houses of Parliament, the British royal family is only a nominal head of state, with actual power residing in the Prime Minister's residence at 10 Downing Street.
As a typical island nation, the conservative atmosphere in the UK is still relatively strong, although it is not as pronounced as in some other island nations.
Every time the U.S. President visits the UK, he must perform a set of traditional etiquette before the Queen, and at this time, the British media always mocks the Americans' rudeness and ignorance, highlighting the former glory of the declining empire.
As the royal car, Rolls-Royce also adheres to the tradition of maintaining its status, requiring each car to be handcrafted and carefully selecting its customers, claiming that not just anyone with money can buy this car.
As a British colony, Hong Kong has been influenced by the British in many aspects. Many of the city's tycoons favor British car brands, especially Rolls-Royce.
However, Zhongshi, deeply influenced by American culture and accepting values such as freedom and equality, does not much agree with the British style, sometimes even ridiculing it.
Thinking of a person wearing a top hat, holding a cane, carrying an antique pocket watch, and dressed in a thick velvet overcoat, Zhongshi finds it amusing. This outfit would not work in Hong Kong, where the weather is completely different from London's. If dressed like that, one would be heat-stroked.
Due to the lack of information and the weak influence from the U.S. side, Zhongshi has no way to find out the source of this capital, unlike the major institutions and funds in the U.S. that might have a rough understanding of his positions and capital sources.
The S&P 500 futures began trading in 1982. Initially, people were not very familiar with this new investment method, and the daily trading volume on the Chicago Mercantile Exchange was only around 15,000 contracts. However, as people became more familiar with this investment method, the trading volume of futures on the Chicago Mercantile Exchange grew significantly, becoming an excellent risk management tool for stock investments in the New York Stock Exchange.
For example, institutions that are long on stocks in the New York Stock Exchange can short the futures in Chicago to hedge their risks. This is still the case with a limited range of investment options. In fact, with financial innovation and the increasing variety of trading options, various unimaginable trading methods and hedging strategies have emerged.
"Such a large amount of capital must be shorting stocks on the New York Stock Exchange. I'll find out which side it is later!" Zhongshi thought for a long time but had no clue, so he decided to stop thinking about it. After all, he knew that the Dow Jones Index in New York had already reached its highest point in recent years and would gradually decline in the coming days. By October, the decline would accelerate, and on October 18th, following a speech by the U.S. Treasury Secretary, the panic in the market would intensify, leading to a rare stock market crash.
"What are you thinking about? Today's operations went really well. Just one fluctuation, and we made so much money. I never thought it would be like this before!" Since leaving the futures company, Zhongyi's face had been filled with excitement, and even after half a day, he had not calmed down.
"What if I had made the wrong move today, what would have happened?" Zhongshi looked at his cousin's somewhat overjoyed expression and said calmly.
"..." Zhongyi was stunned, not daring to think further. If he had made the wrong move today, it would have resulted in a loss of tens of millions of dollars, and with their total capital of only $200 million, they would be bankrupt in just a few days at such a loss rate.
Zhongyi involuntarily shivered, feeling a sense of fear. Futures trading is a zero-sum game; if someone wins, someone else must lose. Therefore, survival is the most important thing, and one must always think about cutting losses to ensure long-term survival.
Seeing his cousin's gradually serious face, Zhongshi stopped talking and instead turned to Lu Hu, who was listening intently to their conversation, and said with interest, "Lu brother, what did you do with the money we made last time?"
Last time, under Zhongshi's encouragement, Lu Hu and a few brothers pooled their money and gave it to Zhongshi to manage. They bet on Argentina winning the championship, and Lu Hu was generous, dividing the three million dollars equally among the four, with each receiving 750,000 Hong Kong dollars.
With the money, the first thing they thought of was to buy property. The real estate market was just recovering, and their money was enough to buy a decent apartment. They bought houses in places like the New Territories and Causeway Bay, settling down. However, Lu Hu had a different idea and did not rush to invest his money in property, especially since he was already living in Zhongshi's mansion and had no need to consider it.
Lu Hu had been thinking about asking Zhongshi for advice on how to invest the money to make it grow, but he never had the opportunity until today.
"I've kept the money in the bank, and I haven't made any plans yet!" Lu Hu was delighted, but his eyes were still fixed on the road ahead, his mind racing.
"Keeping it in the bank is the least profitable option, though it's safe. Have you thought about investing it?" Zhongshi frowned first, then asked tentatively.
Although he and Lu Hu were close, he did not feel right making decisions about money for others. However, he had a good idea and felt it would be a waste not to use it.
To his surprise, Lu Hu was waiting for this very question. As soon as he heard it, Lu Hu nodded vigorously, making a "mm-hmm" sound to ensure Zhongshi saw his nodding.
"Right now, there are two good options: one is to invest in the Hang Seng Index, and the other is to invest in the stock market. Which one do you prefer?" Zhongshi was pleased to see him agree.
"Ah?" Lu Hu was clearly taken aback, his hand slipping, causing the car to veer off course. He quickly regained his composure, pulling the car back on track, and wiped the cold sweat from his forehead before cautiously asking, "What's the difference between the two?"
He had seen Zhongshi make several million dollars in just half a day by investing in the S&P 500 market and felt very envious. However, when Zhongshi mentioned another scenario, he realized it could also result in a loss of several million dollars.
Thinking about this, he felt a sense of fear, wondering if the stock index was just a matter of luck, no different from gambling. So when he heard Zhongshi mention the index, he was at a loss.
Although he did not understand what the S&P 500 or the Hang Seng Index was, according to Zhongshi, they were similar. As for stocks, he had heard a lot about them over the past two years and had some understanding of their rules.
"What? The Hang Seng Index? With his money, wouldn't he just be a target for others to exploit?" Zhongyi said in surprise.
In May 1986, the Hong Kong Futures Exchange successfully launched the Hang Seng Index futures. By October 1987, the trading volume had exceeded 25,000 contracts. Each contract was worth 50 Hong Kong dollars per index point, and the Hang Seng Index was around 2,000 points, making each contract worth about 100,000 Hong Kong dollars, a significant amount for Lu Hu.
When shorting the S&P 500, Zhongshi had considered doing the same with the Hang Seng Index, but the Hong Kong market was too small to achieve his goal of rapidly increasing capital.
Hearing Zhongyi's unintentional comment, Lu Hu's face turned red, and he quietly turned his head, focusing on the road ahead.
"Small markets have their own ways of playing. As long as the operations are flexible, you can still make a lot of money!" Zhongshi said without hesitation. Indeed, while it might not be as easy as making several times the investment, a 50% annual return was still quite safe.
"Old Lu, in fact, if you invest in the Hang Seng Index, you could make several times your investment in a short period. If you invest in the stock market, you will have a steady return over a long period, though it grows slowly, but you grow with the company, which is not inferior to investing in the Hang Seng Index."
"Would I lose everything if I invest in the Hang Seng Index?" Lu Hu glanced at Zhongyi's face and asked cautiously.
"Of course, that's called a margin call. You won't just lose your money; you'll also be in debt!" Zhongyi's face was serious, clearly having studied the financial markets recently and knowing a lot about futures.
"I'll invest in the stock market then!" Lu Hu saw that Zhongshi had the same serious expression and knew that Zhongyi was not exaggerating. Without hesitation, he said firmly.
"Alright, find a brokerage as soon as possible, and when the time comes, I'll recommend some stocks to you." Zhongshi nodded and stopped talking.
Futures, with their high risk, are not suitable for ordinary people.
(Today, I found out that the Shanghai Stock Exchange is about to launch individual stock options and is currently conducting online training. If you're interested, you can check it out.)