Golden Spoon Investor

Chapter 554 554: CH555

[Eastman Kodak sells more than a thousand digital-camera patents for 1.1 billion dollars]

It was the kind of deal that would later shake the smartphone and electronics industries, but at the moment, no one paid attention. The S&P 500 had crashed through the 1,400 level, and the Nasdaq was hovering near its previous low.

One by one, major tech companies—including Amazon—reported disastrous earnings.

With economic indicators also coming in weak, the already-battered market kept falling without a hint of recovery. A few brief rebounds appeared whenever bargain hunters tried to call a bottom, but the relief never lasted. Within days, the market would collapse again, erasing the bounce and plunging even deeper.

That morning, as soon as the opening bell rang, the entire board lit up bright red. Panic selling had taken over.

"Sell ten thousand shares of Amazon at twenty-nine thirty-one!"

"Dump twenty-eight hundred shares of Texas Instruments at market!"

"What? Oracle's at eighty dollars twenty-four cents? It was at eighty-one just a minute ago!"

"Damn it! Sell everything at that price!"

The roar inside the wide Lehman Brothers trading floor alone was enough to tell anyone the market was in freefall.

Shock and despair filled the air. Traders screamed into their phones, desperate to execute orders as prices collapsed in real time.

Rackman, a veteran senior trader, was no different from the rest.

He hadn't slept properly in days, caught in a nightmare of nonstop crashes. His face was tight with nerves, his bloodshot eyes darting between screens as he hammered at his keyboard or barked orders over the phone.

"With Amazon getting crushed, eBay, Lycos, and Yahoo are tanking with it!"

Charlie, the trader beside him—bearded and unshaven from lack of time—grabbed at his hair in frustration.

Rackman had just finished a call. He lowered the handset and replied in a rough, gravelly voice,

"It's not just those stocks. The entire market is collapsing."

He dragged a tired hand down his face and exhaled long and hard.

All around him, traders kept shouting as if they were fighting for their lives.

Rackman felt his mind going numb. A slight ringing buzzed in his ears.

He looked at the monitor in front of him, saw the total losses he had racked up so far, and shut his eyes tight.

"Ah… damn it."

Just a few months ago, Rackman had been feeling confident, expecting a generous bonus after beating his targets.

Now he wasn't even worried about profits—he was worried he'd be fired because half of his fund's capital had evaporated.

The only small comfort was that he wasn't alone. All of Wall Street was being shredded by the market crash.

He wasn't sure if that made things better or worse. He sat there, feeling bitter, when suddenly one of the traders slammed his phone down and screamed like he'd been stabbed.

"Damn it! What the hell is this now!"

Startled, Rackman frowned and looked over. Charlie, sitting beside him, let out a low groan.

"Ugh… Oracle just released their numbers."

"Earnings shock?"

Rackman asked with a stiff expression. Charlie shook his head weakly.

"No. Their net income doubled from last quarter. Five hundred million dollars. Seventeen cents a share."

"So they beat the estimate. The forecast was thirteen cents."

"It would've been fine if they stopped there. But after the report, they said next quarter's revenue will come in weaker than expected… and they didn't give any guidance."

"Again?"

Microsoft, Intel, Sun Microsystems—one after another, major tech companies had announced strong earnings but then followed up with grim outlooks, warning that sales would fall. It had already sent shockwaves through the market, and now Oracle had joined the list.

Sure enough, despite rising more than seven percent over the past two days on earnings expectations, Oracle's stock was plunging right after the announcement.

"Shit! Thirty-two fifty just broke!"

Someone nearby shouted in horror.

Rackman quickly checked his monitor and froze.

Nasdaq: 3,245.49 (–42.34)

The Nasdaq had finally fallen below its previous low, the last psychological support level. A chill ran through him as he realized the market's fear would explode even more violently.

He bit down hard on his lower lip.

He wanted to deny it, but the truth hit him with full force:

the dot-com bubble was really bursting.

***

Bear Stearns headquarters, Midtown Manhattan

When Fuller, the chairman, saw the Nasdaq close barely above 2,500—less than two weeks after breaking its previous low—his heart nearly stopped.

The drop was that shocking. Since the market crash began earlier in the year, Bear Stearns had already taken more than ten billion dollars in losses. Given that, his reaction was hardly surprising.

The tension inside the chairman's conference room was heavy. The executives seated around the long table wore grim expressions that reflected just how dire the firm's situation had become.

Fuller, seated at the head of the table, pulled the cigarette from his lips and crushed it into a crystal ashtray. Then he turned toward Royer, the CIO seated to his left.

"Do you think the Nasdaq can hold above twenty-five hundred?"

Royer's gaunt face tightened. He hesitated, unable to answer right away, then finally shook his head weakly.

"Hewlett-Packard released its quarterly earnings after the close. Forty-one cents per share—well below the fifty-one cents expected. And considering they also withdrew their plan to acquire PricewaterhouseCoopers… we should expect another steep drop tomorrow."

Fuller leaned back in his chair and rubbed his face with one hand, despair creeping into his expression.

"I thought the election might turn things around once it was over. But instead, the news keeps getting darker."

Milton, the COO seated on Fuller's right, spoke up with an equally grave tone.

"The stock market is a problem, but what we need to deal with immediately is our options contract with the Eldorado Fund. That has to be settled first."

Fuller frowned.

"How much have we lost so far from the put-option contracts with them?"

Royer answered with a pained look.

"More than seven hundred million dollars… just from the put options."

Fuller let out a long, guttural groan.

Fuller let out a groan before he even realized it.

Seeing that, Royer, the CIO, quickly tried to defend himself.

"The tech giants took the biggest hit in this crash. Because our put-option contracts were tied to stocks like Cisco, Oracle, and Dell, our losses ended up even larger than the index decline."

"You're the one who said those major tech stocks wouldn't crash within a year!"

Fuller shot to his feet, eyebrows raised, shouting angrily.

It was true their valuations were high, but Fuller himself had agreed with the idea that what was happening wasn't a bubble but a new economy driven by the rise of the internet. That belief was why Bear Stearns had been willing to sign such a massive options contract with the Eldorado Fund in the first place.

And now Royer was distancing himself from the consequences, which made Fuller feel even more furious.

Royer was frustrated too, but he knew pushing back would only make things worse for him, so he held his tongue.

Seizing the brief pause, Milton spoke up.

"This isn't the time to argue about who's at fault. We need to resolve this before the losses get any worse."

Fuller snapped back in a voice full of irritation.

"You think I don't know that? I'd tear up the options contract right now if I could, but those wolves at the Eldorado Fund aren't going to let that happen easily!"

"It won't be easy, but we have to convince them somehow. If we don't get out of this contract, the consequences could spiral beyond our control."

Leaning forward, Milton continued with a grim expression.

"We're already losing clients who want to pull their money out because of our losses from the crash. If a rumor spreads that we also suffered massive losses from the Eldorado options contracts, and a bank run follows, we won't be able to contain it."

Milton glanced at Fuller, arms crossed, his voice firm with warning.

The amount owed to the Eldorado Fund—from both put options and index futures—was enormous, but it wasn't enough to topple Bear Stearns by itself.

What Fuller and the rest of management truly feared was a bank run.

Under normal circumstances, the odds would be low. But with investor sentiment already shattered by the bursting bubble, a rumor that Bear Stearns had taken a catastrophic hit on an options trade could easily push clients into a panic. People terrified of losing their deposits could rush in at once.

If that happened—if the outflow hit all at once—not even Bear Stearns would survive. Funds would evaporate in an instant.

Just imagining the scenario made Fuller's face turn pale. He looked at Royer and asked, voice unsteady—

"What does that man Landon even say he wants?"

"No matter how much we try to persuade him, he keeps repeating that he doesn't have the authority to make the decision."

Royer answered with a troubled expression.

"Then who does have the authority?"

Fuller snapped, the frustration bursting out of him. Royer let out a long sigh.

"He says it belongs to Chairman Park Seok-won."

"And where is this Chairman Park right now?"

"I understand he's currently in Korea."

Fuller chewed hard on his lower lip as he thought, then finally spoke with a lowered, heavy voice.

"Then there's only one way."

"What are you planning to do?"

Milton sensed something unusual in Fuller's tone and asked cautiously.

"If Chairman Park is the one with authority, then we'll have to go to Korea and negotiate with him directly."

Fuller's answer came out flat and bitter.

Milton's eyes widened in shock.

"You mean you're going to fly to Korea yourself?"

"We're the ones in urgent trouble here, not the Eldorado Fund. When you're thirsty, you're the one who has to dig for water."

Firming his resolve, Fuller gave the order without hesitation.

"Before things get any worse, arrange a meeting. Prepare the private jet immediately."

"…Yes, sir. I'll take care of it."

It was humiliating, but Milton answered as if he knew there was no other choice.

Fuller sat back on the sofa and clenched his fists tightly on the armrests.

"To think I have to fly all the way across the Pacific to Korea… begging some private fund to tear up a contract. What a pathetic situation we've ended up in."

His bitter muttering hung in the air. The executives seated on either side of him stayed silent, their faces clouded with the same gloom.