Chapter 82: Conservative Investors Striving to Diversify Risk

Leverage, what a wonderful thing!
It allows you to leverage small amounts of money for large gains, a gambler's dream, a financial "magic bullet"!
But as the saying goes, what goes around comes around.
There's no such thing as a free lunch. Leverage, in essence, is borrowing money.
Making a fortune is naturally wonderful, but once you lose, the losses aren't as simple as one plus one equals two; they multiply exponentially!
It can make you experience "bankruptcy" in no time.
Back in the day, before the subprime mortgage crisis, that financial nuclear bomb exploded, leverage wasn't regulated so much.
But since that crisis, regulators in various countries have become much more sophisticated, imposing strict limits and regulations on leverage not only on ordinary people but also on institutions like securities firms.
In short, they're afraid of another global financial tsunami, where everyone would be wiped out.
Of course, in high-risk, high-return markets like futures and forex, high leverage is not uncommon.
"But then again, once you reach a scale of tens or hundreds of billions, the leverage becomes increasingly lower, right?"
Huang Fengwen of Fanghuan Investment was currently smoking with one of his senior executives, Liu Zhuo, in his office.
To leverage, you need someone to guarantee it; you need sufficient margin.
But when your principal expands from hundreds of millions or billions to hundreds of billions or trillions, the rules of the game change.
For small sums, banks or securities firms might be happy to play the leverage game with you.
But once the amount exceeds the bank's risk control limits, they won't bother with you anymore. What if you mess things up? Who will the bank complain to?
That's when financial giants like "major brokers" step in.
"To be honest, even with a major broker acting as a go-between, billions in leverage isn't something just anyone can get.
Unless your credit rating is off the charts, practically radiating brilliance."
Liu Zhuo adjusted his glasses and analyzed.
"Just some random Tom, Dick, or Harry, with billions in hand, wants to play with ten times leverage?
Which brokerage or bank would dare to take that on? Dream on!"
"Don't even mention ten times, even if it's just two times, it still requires a rigorous credit assessment that would make them want to dig up your entire family history."
Of course, there are always exceptions. If you're a globally renowned super-rich individual, or someone with enough wealth to withstand losses, then brokerages and banks might consider it.
But 99.9% of the time, it's a simple "get out."
Risk control is more important than a father to these financial institutions!
After all, the 9/11 attacks and the subprime crisis still sting them.
"But... what's Su Hao's motive for getting involved with those big brokers?"
Huang Fengwen took a deep drag on his cigar, his brow furrowed.
Big brokers refer to the behemoths at the top of the financial food chain, like the top investment banks on Wall Street, such as Goldman Sachs and Morgan Stanley.
Their main job is to help wealthy clients with money to burn, such as hedge funds, to make a name for themselves in overseas markets, or to facilitate their partnerships with various investment projects.
If clients want to increase leverage, they will lend at their discretion based on their own strict credit assessment system.
"It's said that they've gotten involved with various hedge funds through major brokers and are still using their 'stock lending services'."
Liu Zhuo added.
“Holy crap! He's even using stock lending? This kid's got some nerve!”
Huang Fengwen nearly jumped out of his chair.
Stock lending services are one of the core businesses of large brokerage firms, and their unique specialty.
Simply put, it involves borrowing shares of specific companies from institutions or pension funds holding massive amounts of stock, and then using those borrowed shares to short the market!
Hedge funds, those hungry wolves, love this kind of shady operation.
"So, Su Hao is now splitting his money into tiny pieces and scattering it everywhere?" Huang Fengwen sorted out his thoughts.
"Exactly, completely unlike the Su Hao we know." Liu Zhuo nodded, his tone complex.
The Su Hao of the past either didn't act at all, or when he did, it was swift and devastating, concentrating his firepower for a single, decisive blow.
At this moment, Su Hao was directing the massive sum of seven billion yuan, meticulously dividing it and distributing it like fish food across a variety of financial products on the market.
"He's... finally figured it out, he knows how to diversify his investments?" Huang Fengwen could hardly believe his ears.
To most people, Su Hao's actions seemed like those of a diligent, risk-averse, conservative investor.
"Quite the opposite, Chairman Huang," Liu Zhuo's words shattered Huang Fengwen's beautiful illusions.
When has Su Hao ever acted according to common sense?
If he were to honestly engage in value investing and risk diversification, the sun would rise in the west!
"Didn't he say he split the money up and acted separately?"
"He did split it up. But no matter how many detours the money took, it all ultimately converged on one target—Zhongda!"
What kind of divine operation is this?!
Huang Fengwen felt like his CPU was about to burn out. All that effort, dismantling the project piecemeal, only to end up focusing all his resources on one thing?
What's the point?