Chapter 27
Chapter 27
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Translator: MadScientist
Chapter: 27
Chapter Title: Wolf of Wall Street (1)
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After a long while, I'd been busy putting other people through the wringer.
Setting up a hedge fund on Wall Street wasn't easy. Fortunately, Ha Young-il, the elite with foreign experience, was someone I could talk to easily.
"We should start with a boutique fund for now. I have a few close friends in mind—any specific criteria you'd like?"
His eyes held expectation, anxiety, and a hint of doubt.
Why wouldn't they? Sure, I was a bit tall for my age... but I was still just a kid.
"You can bring in some suitable friends, but keep it to three or fewer."
A boutique fund meant a small-scale operation. Families ran them often, aiming for a tight-knit elite group of no more than ten total.
Too many people, and it got chaotic.
...Though most small funds just didn't have the bandwidth anyway.
I nodded and raised my index finger.
"And one condition: loyalty only. Not too weak... and just the right amount of dumb."
"Mm, got it."
The good news was that regulations on hedge funds were still lax back then. Small operations were exempt from most SEC registration requirements.
Tap, tap.
I drummed my index finger on the table and rattled off the next instructions.
"We won't be taking onshore investments in the U.S. for a while, so ignore onshore and focus on offshore. Bermuda, right? Setting up the corporation there should handle most regulations...."
Ha Joo-seong would liquidate the Japanese real estate. Route it through a paper company for laundering, then inject it into the offshore fund I'd prepped for foreign investments. Initial capital sorted.
Surprisingly, this was the trickiest part. Making money was easy; laundering it was hard.
That's why I'd handed it to a veteran like Ha Joo-seong.
"Structure the management company as an LLC. Delaware for tax breaks and benefits—you know the drill, it's famous...."
Laws varied by state in the U.S., and Delaware was generally the best for businesses. Tons of companies incorporated there.
Basic stuff, but it was enough to impress Ha Young-il.
"...Father mentioned it, but... this is truly astonishing."
He gaped in disbelief, full of admiration.
"Yeah, I'm a genius."
I grinned and nodded.
"...Genius doesn't even begin to cover it. Whew, this is really...."
His eyes sparkled—the familiar gleam I often saw on Wall Street.
"Feels damn good, doesn't it?"
"Right?"
This was why I couldn't quit playing the money game.
Once I figured he'd bought in, I dropped the formalities and dove into the details.
Ha Young-il, now fully committed to trusting me, rattled off jargon right back at me in a proper conversation.
"I'll handle all the fundamental analysis and risk management. Just fill in the rest for show."
"...Aren't I supposed to be directing?"
"We still need to dress it up for the outsiders. Packaging a genius's intuition as analysis isn't easy."
"Hm, fair point. But whatever else, hire a real pro for accounting—don't forget."
Scribble scribble.
Next to me, Lee Si-hyeon was furiously taking notes, brow furrowed. She seemed determined to execute my orders perfectly.
"Our fund's baseline will be long-short strategy only. Short selling on its own only for special occasions."
Ha Young-il tilted his head.
"I figured you'd go aggressive."
"I'd risk it with my own money, but for a fund, trust is everything. Investors hate aggressive plays. Yet they demand sky-high returns—hypocritical, but anyway, basic long-short lets even idiots trade, so plenty of upsides."
Click.
I spun my pen while pondering the next directive. Hard to gauge what he knew and what he didn't....
Before that, something nagged at me, so I pivoted with another question.
"By the way, is this your usual line of work? You're surprisingly good at it.... Even if Uncle Joo-seong taught you, that's solid for a college kid."
"...Does it compare to you, miss?"
He stared at me in bewilderment for a moment, then cleared his throat awkwardly before answering.
"Truth is, I've always wanted to start a hedge fund. Dad smacked some sense into me, so I dropped it...."
"Hm, a ready-made talent. Welcome aboard."
This guy's a bit off too. No backing, and he wanted to launch one now? Timing's prime for hedge funds, sure, but still....
"...."
An awkward silence followed briefly.
Flip flip.
Only the sound of rustling papers filled the room, so bored, I shook out my hair and stood.
Ehh.
I jumped up to help my groaning secretary.
"Si-hyeon, anything else you're curious about?"
"...C-Can I ask?"
"Why not? Ask when you can."
Lee Si-hyeon scratched her cheek with her index finger, looking embarrassed, then finally spoke.
"So... what exactly is a hedge fund...?"
"Ahem."
A stifled chuckle came from beside her. Her face flushed red as she waved her hands, insisting she wasn't that clueless.
"No, I-I know roughly. It's a fund, right? Investing other people's money."
Hm, true to form—never lets me down.
A great secretary makes her boss shine.
I gestured overly kindly and scribbled "Hedge Fund" in English on the paper with my ballpoint.
"Here, Si-hyeon. Read this."
"I can read English! It's hedge fund. I-I went to a decent school too...."
"But not Seoul National, right? Compared to my Ivy League pals, you're a step behind, my poor Si-hyeon."
I flunked in my past life, but I'd ace it this time. Fine by me.
"Urk...."
Ah, this is fun.
Really nailed the secretary pick. Hired her for looks, but hit gold.
"Alright, Miss I-Can-Read-English Lee Si-hyeon. So what's 'hedge' mean?"
"Fence, safeguard... that kind of thing. In investing, it's risk management... I think."
Yep, learned a fair bit.
Shifting positions in the market isn't easy. So you buy the opposite position outright—that's hedging risk.
Less profit on ups, but don't lose big on downs. Like insurance.
"But sounds like you didn't learn more?"
"I picked up dollar laundering in Myeongdong.... B-But I didn't have much time...."
"...Well, fieldwork matters too."
I cleared my throat and decided to explain properly. She'd been through a lot, come to think of it.
"Betting on stocks rising is long position; falling is short."
Pure short-selling? That's naked shorting—borrow what you don't have, sell, buy back later.
"...I know that."
"Good. Now, hold long in one stock and short in another—what happens?"
"Long the rising one, short the falling one?"
"Precisely, short the overvalued ones."
Lee Si-hyeon pondered, then answered.
"...Double the profits?"
Exactly.
That's how you rake it in.
"Funds that make bank like that? Hedge funds."
"Wait, hold on."
Something dawned on her; she tilted her head.
"But isn't this unrelated to risk hedging? I learned hedging means opposite positions in spot and futures. Same stock long-short manages risk, right?"
That's the textbook version.
"Still hedging, though?"
"...?"
"Kidding. It does manage risk that way."
"How? Separate stocks mean double the risk, no?"
Easy to think that, but actually, risk drops.
"Individual stocks mostly follow the market. Bad news hits the market? Both tank regardless of stock."
"...Aha."
Risk managed.
All longs? Downtrend kills you. Mix in shorts? Profit there.
"Especially... pick shorts wisely. Overvalued stocks can drop even in bull markets."
In bears, they crater harder.
What if my short doesn't drop? Market's bull—my longs profit instead.
Steady gains in bull or bear. Magic strategy.
For now.
"Mm, sounds solid so far. But... something's missing."
"What?"
"You don't seem the type to like it."
Lee Si-hyeon had unshakable faith in me. That I was an extraordinary lunatic.
And she was mostly right.
I shook my head like it was obvious.
"Si-hyeon, halve the risk? Double the leverage, duh."
She gaped, mumbling in disbelief.
"...What? Hedging risk just to crank leverage? Defeats the purpose—no gambler ups the stakes like that...."
Ironic, huh?
Modern hedge funds charge into insane risks for insane returns. High-risk, high-reward incarnate.
Surprisingly, "hedge" has little to do with it.
"It's fine—I'm a genius."
Heaven gave me future knowledge—what else is that?
I beamed, stretching my arms skyward like a stage actor, and shouted theatrically.
"High risk, high return—do anything for the money! That's the essence of modern hedge funds."
The difference between them and me...?
I'll just take the returns.