James Robinson showed hesitation upon hearing Noah Scott's question.
Simon West's previous stock index futures operations – one success might not mean much, two in a row could be attributed to luck, but three consecutive times was enough to prove that young man undoubtedly had something up his sleeve.
Under these circumstances, if Lehman Brothers followed his moves, they could absolutely reap unexpected profits. As the CEO of American Express, Lehman Brothers' parent company, James Robinson hadn't reached his position without a healthy appetite for risk.
However, this behavior was clearly insider trading in its most standard form.
American Express had acquired Lehman Brothers three years ago precisely to enter the long-planned investment banking sector.
If they proceeded with following Simon's trades and were exposed, Lehman Brothers would undoubtedly face investigations from the SEC (Securities and Exchange Commission), and the company would experience a massive client exodus.
Most importantly, other Wall Street investment banks would absolutely seize the opportunity to drive American Express, this potential powerful competitor, out of the investment banking field.
But.
A staggering profit of over $200 million from a $75 million principal in just three and a half months – this kind of windfall was incredibly difficult to resist.
One had to understand that American Express, a global financial and travel services company with a current market capitalization exceeding $13 billion and over 50,000 employees, had reported a net profit of just over $180 million for the entire second quarter of 1987.
Clearly, the profits generated by this young man, not even twenty years old, in the stock index futures market over just three months had already surpassed the quarterly earnings of a behemoth like American Express.
After weighing the pros and cons for several minutes, James Robinson ultimately couldn't resist the temptation. He patted the Westeros Company's trading records in his hand and said to the Scott father and son, "I'll discuss this with Paul and the board over the weekend. I'll try to allocate funds by next Monday. Neil, you'll be in charge of this. Noah will handle the trading. Both of you will report directly to me. Remember, extreme caution is paramount. You both understand the consequences if this is exposed."
...
Los Angeles.
Inside the Palisades mansion, Simon hung up Noah Scott's phone call, lost in thought as he leaned back in his leather chair.
Janet had been sitting rather unladylike on the large desk in front of Simon. She held the reports Noah Scott had sent, swinging her bare feet casually as she browsed them with interest.
Seeing Simon hang up, Janet pointed her toes at his leg and said, "You little rascal, I believe you now. It won't take you many years to achieve those three wishes at all."
His train of thought interrupted, Simon simply smiled, grabbed the mischievous foot on his leg, and tickled her sole a few times. "You didn't believe me before?"
Janet giggled and pulled her foot back. "Of course I did. I just didn't expect you to make money this fast. My family, starting from my great-grandfather, has accumulated about $2 billion in wealth over a hundred-plus years."
Simon said, "But I certainly don't have the ability to push the federal government to abolish inheritance tax. So, your family is still more impressive."
When Simon and Janet's relationship was exposed earlier in the year, media reports had mentioned the Johnston family's role in pushing Australia to abolish its inheritance tax. Influencing a country's fundamental tax system – that was true, deep-rooted influence.
Now, despite possessing a fortune in the hundreds of millions, if his wealth were fully exposed, many would likely see him as nothing more than a 'fat sheep'.
Simon was acutely aware of this.
As someone with foreknowledge, accumulating wealth wasn't particularly difficult.
The simplest method: Microsoft's current market cap was only around $1 billion. If Simon invested $200,000 in Microsoft stock now and held until 2000, selling at its peak market cap of $600 billion, he'd instantly become a billionaire.
$200,000 – many middle-class families could raise that amount just by selling their homes in the current peak of the North American real estate bubble. But they would have no way of knowing that this sum could make them billionaires over a decade later.
Simon, however, did.
But if his sole focus was hoarding wealth, even if he amassed $100 billion, without the corresponding social influence to match that fortune, he would ultimately remain nothing more than a '$100 billion sheep'.
Therefore, Simon wasn't overly smug about the massive profits from the index futures market. To shed the 'fat sheep' status, he still had a long road ahead.
Seeing Simon fall silent, Janet waited patiently for a moment before gently scratching his leg with her toes again. "What are you thinking about?"
Simon told the truth. "fat sheep."
"Heh," Janet chuckled. "You're sensing it too?"
" Sensing what?"
"Noah," Janet blinked. "His eagerness today is clearly suspicious."
Prompted by Janet, Simon finally grasped the thoughts that had surfaced after hanging up the phone. He smiled too. "Three times in a row, turning $75 million into $278.56 million. If Lehman Brothers can resist following, it wouldn't be Wall Street."
Janet asked, "So what are you going to do about it?"
"As long as Lehman Brothers' actions don't harm our interests, letting them earn some is fine," Simon said, then shook his head. "But that doesn't seem very realistic."
If Lehman Brothers, backed by American Express, followed, their capital would undoubtedly exceed the less than $300 million principal in the Westeros Company account.
If it were just long-term positions like the current ones, it might not matter much – being copied wouldn't be a big deal. But the stock market crash in late October would be a different story.
From Simon's memory, during the 1987 crash, the US government's rescue measures were swift and effective. The North American stock market stabilized within just a week. Moreover, the S&P 500 index remained at its bottom around 200 points for an even shorter period.
The short positions planned for Westeros Company's final move would only yield maximum profit if closed out at the 200-point bottom. However, the daily trading volume for index futures contracts was ultimately limited.
If Lehman Brothers also held a large number of short positions after the crash, they would undoubtedly prioritize closing out their own contracts first. Westeros Company's holdings might only be tradable after the index rebounded. By then, Simon's profits would certainly shrink significantly.
Janet saw Simon lost in thought again and didn't interrupt.
After pondering for a while, Simon said, "Let's set this aside for now. We'll deal with it after Pulp Fiction wraps."
As planned, Pulp Fiction would finish shooting in mid-September. Simon still had half a month to maneuver.
Moreover, film matters were ultimately the most important to Simon.
To avoid being seen as a 'fat sheep' despite his massive wealth, Simon needed to possess considerable influence.
Hollywood happened to be the foundation of power Simon had chosen.
If he could gradually take control of this globally influential film industry base, coupled with his own accumulated wealth, Simon could truly shed his 'fat sheep' status and become a major player capable of influencing this country, even the world.
Hearing this, Janet seemed confused. "But we could just withdraw all the money from the futures account. Then Noah could go cry in a corner."
"No," Simon shook his head, smiling wryly. "Doing that now would be tantamount to telling them we plan to switch futures brokers. Wall Street is actually quite small. Do you think Lehman Brothers wouldn't find out where we open our new account?"
Janet thought for a moment and conceded reluctantly, "It seems you're right."
...
Before they knew it, another weekend passed quickly.
Time flew into September.
Over the weekend, under the personal direction of American Express CEO James Robinson, Lehman Brothers mobilized $500 million in one go, intending to secretly follow Westeros Company's trades.
However, to Noah Scott's surprise, compared to the previous three heavily leveraged moves, Simon only instructed him to gradually establish 6,000 short contracts between 337 and 330 points throughout the new week. Moreover, these were December short contracts.
Switching from long to short was within Noah Scott's expectations.
But a short position of 6,000 contracts only utilized 30% of the funds in Westeros Company's account, far lower than the consistent 80% heavy leverage used before. The executives who had mobilized large sums to follow Simon's risky move were completely baffled.
A 30% position was a very conservative long-term strategy.
Everyone on Wall Street knew that after a five-year bull market, the North American stock market would inevitably turn downward. Therefore, Westeros Company's current position looked like a cleanup operation, grabbing whatever scraps of profit remained after the main feast.
Could it be?
Had the feast ended just as they were about to join?
If they couldn't achieve substantial profits in the short term, American Express certainly couldn't leave $500 million sitting idle in a futures account long-term.
Noah Scott even briefly wondered if Simon had detected their shadow trading, prompting this change. But that didn't make sense. If Simon had discovered Lehman Brothers' intention to follow, he would have surely changed brokers.
There was no reason to leave money on the table.
Amid this uncertainty, before the first week of September ended, the North American stock market took a sharp downturn. Over the following week, the S&P 500 index plummeted from above 330 points to around 310 points.
Another 20-point drop.
With a contract multiplier of $500, the profit/loss per contract reached $10,000.
Thus, in just one week, Westeros Company's 6,000 short contracts showed paper profits exceeding $60 million.
However, Lehman Brothers' paper profits were even more substantial. Noah Scott had built positions exactly double the size of Westeros Company's. After Simon stopped adding positions, he couldn't resist buying another 3,000 contracts, bringing Lehman Brothers' total short position to 15,000 contracts.
In a single week, Lehman Brothers' paper profits surpassed $150 million.
Yet.
This time, Simon issued no sell order.
In stark contrast to Simon's rock-steady composure, the Scott father and son, directly responsible for this operation, were completely unable to stay calm.
$150 million in profit! That was nearly equivalent to American Express's entire quarterly net profit. More importantly, as the direct project manager and trader, such profits meant they were in line for massive year-end bonuses.
If the S&P 500 kept falling, it would be fine. But as the third Thursday of September – the final settlement day – approached, the previously plummeting S&P 500 index began climbing again.
Lehman Brothers' 15,000 contracts meant every single point move in the S&P 500 represented a $7.5 million profit or loss.
Thus, as the S&P 500 climbed step by step from 310 points, watching '$7.5 million' after '$7.5 million' vanish, and with the index rebounding to a high of 320 points while Simon still issued no trading instructions, all the American Express executives privy to the operation, including CEO James Robinson, could no longer remain calm. Noah Scott finally began closing their positions.
But the S&P 500's upward trend still didn't stop.
By the time Lehman Brothers hastily finished liquidating all 15,000 contracts, the S&P 500 had climbed back to 326 points. From an initial paper profit of over $150 million, Lehman Brothers ultimately realized only $56 million.
$56 million was undoubtedly a considerable gain, but compared to the initial $150 million paper profit, it had shrunk far too much.
Then, events unfolded in a way that again defied the American Express team's expectations.
On September 17th, the third stock index futures settlement day of 1987, the S&P 500 surged to 328 points, but instead of continuing its rise, it began falling again.
In just three trading days (excluding the subsequent weekend), like a roller coaster, the S&P 500 plunged once more from its 328-point high back down to 313 points.
At this moment.
In Westeros Company's account, the unmoved 6,000 contracts once again showed paper profits approaching $60 million.
Faced with this situation, Noah Scott, Nelson Scott, James Robinson, and the others were utterly bewildered.
What on earth was happening?
Was that kid doing this on purpose?
What would he do next?
Should they follow again now?
...
Los Angeles.
In stark contrast to the roller coaster of emotions experienced by Noah Scott and the others, Simon, who had already anticipated September's volatility, had devoted most of his energy to the final stages of shooting Pulp Fiction during this period, aside from checking the daily index reports from Chicago.
Finally, on Saturday, September 19th.
With only a few shots remaining, the crew opted for a weekend overtime session. That afternoon, the second film Simon had directed since arriving in this era officially wrapped.
ko-fi.com/godofreader