Chapter 38 |
‘I’m your biggest fan, professor.’ However, I naturally kept my thoughts to myself.
“My clients are preparing to establish an investment firm in England.”
“Then, you have the wrong person.”
Gillian’s smile was bitter, and I had never seen him in such a mood before. Of course, I had only spent an hour or two per class for a semester a long time ago. This may be a new side of his personality, but Gillian was not a person who would be so down, at least to my experience. He graduated at the top of his class in 1991 at London University and entered the Morgan group in the same year. He would earn impressive profits with bond products and earn promotions in 1994 with the derivative products he had developed. In 1995, he participated in establishing the Morgan Group’s trading system, and it would be the foundation of the Group for a long time. He would be called to the New York head office in 1996 to lead in managing the Group’s head office. (EN: Derivatives are securities that derive their value from an underlying asset or benchmark. Common derivatives include futures contracts, forwards, options, and swaps. Most derivatives are not traded on exchanges and are used by institutions to hedge risk or speculate on price changes in the underlying asset.)
Gillian had given Morgan record-breaking profits, but his expression did not show it. Why? His career should be taking off during this time.
“This is unexpected…Ethan.”
It took Gillian a second to remember the name I had used to introduce myself.
“The person that your clients are looking for is not here. Well, I’m sure you’ll get the news. I appreciate the offer, but I’m going to be fired from Morgan soon.”
“Is that so?”
I had been preparing my manuscript last week, and Gillian offered me another bitter smile as I remained silent. He stood up, and he started walking away from me before I could do anything. I chased after him.
“Don’t you want to return to your country?”
“I’ll be only a laughingstock. I cannot return like this.”
***
‘I had gotten used to the fear in the market last year. Therefore, I thought my past achievements and my position was more important than the entry point. However, I was wrong. Compared to the bad, very bad entry points the Group was forced to swallow at the time, all my years, my contributions meant nothing.’ (EN: Entry point refers to the price at which an investor buys or sells a security. The entry point is usually a component of a predetermined trading strategy for minimizing investment risk and removing the emotion from trading decisions. A good entry point is often the first step in achieving a successful trade. Obviously, a bad entry point means losses.)
Gillian stopped his train of thoughts there.
“You’re talking about the Asian financial crisis last year.”
He looked into my eyes and saw understanding, and Gillian’s gaze changed a bit after that..
“It was not only you, but everyone lost money during last year. My clients were livid.”
Gillian shook his head.
“One earned it big, and your clients should find a manager like him.”
Gillian mentioned Jonathan, but his words were not all positive. His frown spoke more. That was how Wall Street thought of Jonathan, and thus, indirectly me.
If an infinite number of monkeys sat in front of typewriters, one of them might write ‘Hamlet.’ My interventions in the finance market were treated like that, a theoretically possible, but incredibly implausible event. It was sheer and amazing luck, like a monkey writing Shakespeare. Their egos made them think like that, and Jonathan’s luck was accentuated in Wall Street rather than his skill, to rationalize their collective failure.
“Well, you are right. Who does not want such profit? It’s everyone’s dream. However, my clients are looking for consistent profit and a strong mentality. I’m talking about you.”
“They don’t know me. I lost a billion dollars.”
Gillian spoke like he was confessing.
“You have earned Morgan more during last year and the year before that, and as I have mentioned, the Asian financial crisis…was a unique incident.”
“Thank you. I never thought I would be consoled like this.”
His tone was sharper than his words.
“If you make a decision, I will persuade my clients.”
“You said you’ll establish your firm in England.”
“It’s planned to be built on the Isle of Man.”
Gillian only nodded his head at the famous tax haven, as he also thought that was the right choice. He then asked the next question, which should have been the first.
“How much funds are there to manage?”
“Fifteen billion dollars.”
Gillian was yet again not surprised.
“There is a directing team that represents the companies my clients own, and I can promise you that they are very skilled. My clients want you to follow the specific directions under the initial plan, and we will be hiring you as our top executive trader.”
I saw the disappointment in Gillian’s face, as he would have wanted directing rights. My offer was the same as what he was doing in the Morgan Group, as their property management team worked like this. They did not give a star player freedom, and each team had their specialized fields, and much of the work was done by computer programs. I spoke again.
“You have to follow the investment plan, but we will not intervene in the specifics and trading method. I am telling you that you can manage the funds as you wish under the plan, without repercussions and as aggressively as you can.”
I planned to pile on incentives so he would not have a chance to refuse.
“Some of my clients desire to invest in you separately, but not now. If you show results, then…”
I emphasized the magic phrase that will bring Gillian into my team.
“They will gladly invest ten billion dollars.”
Gillian acted like his innermost thoughts had been revealed, and his eyes were wild for a moment. The reason Gillian stayed in Morgan despite his genius was simple. While he had been presented with such plans before, he stayed with Morgan for that ten billion.
‘From the first, I said to myself I would not return until I am the manager of ten billion dollars.’
As he mentioned in his lecture, Gillian succeeded in going back to England with the investment and built a global property management firm there. While I messed up his original plans, it was the last piece I needed to bring Gillian over to me. So, the butterflies flew like that. (EN: Those Chaos Theory butterflies are everywhere!)
Gillian seemed to be over the tipping point with me and my funds, and I thought we had an agreement.
“You haven’t asked about my clients.”
“I’m not in a position to do so. Truthfully, if it is not drug money, I don’t care.”
As I expected, Gillian had stopped thinking things over. I wanted to see a mirror since I would hate it if my glee was showing on my face.
“You can relax, they’re not. My clients will be able to provide you with more funds once the investment firm is set up in the Isle of Man. This is just another investment for them.”
Gillian nodded calmly, as he had seen many rich people like that before. Morgan had many such clients, and the group itself was one of them. Also, he would have met a lot of people like ‘Ethan,’ who had come from the tax havens. They were trust company lawyers from the Cayman Islands and the four major accounting firms called the BIG 4 in Wall Street.
While Jonathan would not have met such people often since he had been a small fry, Gillian would have met them every day. Therefore, I was not someone special to Gillian, and he had no reason to be tense in front of me. He asked.
“What are the contract conditions?”
“Your commission is 3%, and your annual salary will be 150% of your current income. For more specific details…”
“No, I am curious about what happens for losses.”
“As I said, nothing unless you fail to follow the investment plan my clients have requested. This will be specified in the contract.”
“It’s an attractive offer. If I do not follow the plan…I will have to take responsibility for the loss, right?”
“Don’t test it. A man like you should not go to prison.”
We both smiled.
“Of course not. I just wanted to check. If my profits are good, will there be additional funds?”
“Yes. I will prepare the contract, and let’s meet three days from now at this hour, in this café.”
“Wait, what about the desk team? Is there a trading team like the directing team?”
“There are a few fixed appointments, and aside from them, you can hire who you want. You will need many.”
“That’s nice.”
“Then.”
“Then.”
We shook hands and separated. The meeting had been short and clean, and I could smile happily now.
***
Ironically, when Jonathan was in Seoul, I was in New York.
Jonathan had to complain since Gillian had become famous from being trusted with unprecedented funds from Morgan. He had been only known inside the Morgan Group until then.
While I emphasized the word managing, Jonathan did not notice it.
Then, the probability was less than 1%, as the offshore funds were that difficult to trace. The firms we had given the job had survived since WW2, and I had used eight of them round-robin style.
Things became quiet for a moment.
Jonathan’s voice was shaking, which was a bit strange.
Edited by Userunfriendly
I’m your biggest fan, professor.
“My clients are getting ready to establish an investment company in England,” I said while pushing my thoughts away.
“Then you came to the wrong place,” Gillian’s smile was bitter.
I had not seen that expression on his face before. Of course, I had only spent one or two hours in his class for one semester in my past life, but he wasn’t such a person who would be discouraged to that extent.
In 1991, he graduated with honors from the University of London, then entered the Morgan Group in the same year. After earning huge profits with bond products, he was promoted with the derivative product he developed in 1994. He contributed greatly to the development of the Morgan Group’s trading system in 1995, and it became the breadwinner of the company for a while. In 1996, he was assigned to the New York headquarters and led in managing the group’s head office.
Gillian had consistently provided record-breaking profits to Morgan Group, but his expression was dark. But why? He had hit home run after home run.
“This is unexpected. Your…”
It took Gillian a while to recall the name I had used to introduce myself.
“There’s no one here that your clients are looking for. I don’t understand why you came to see me. Thanks for your offer but I’ll be fired from Morgan soon. Thought you would find that out,” he sounded depressed.
“Oh, is that so?” I responded.
He said, “It’s not a secret that the Morgan Group lost lots of money in two areas from the Asian financial crisis. As you know, I was in charge of one of them. I’m not making this up to reject your offer. If you read the Wall Street Journal published last week, you’ll know it all.”
I had been focusing on the manuscript last week, so I didn’t check the news then. Gillian smiled bitterly again as I remained silent, then he stood up. He was already far away before I could even stop him.
“Don’t you want to go back home?” I asked to the back of his drooping shoulders after chasing after him.
He replied in a dull tone, “I’ll be a laughingstock, so I can’t go back like this.”
***
“I was confident that I got used to the fear in the market last year. That’s why I thought the size of the position was more important than the time of entry. But I was completely wrong. All of my contribution and time became nothing with a very bad entry time,” Gillian stopped there.
“You mean last year, right? The Asian financial crisis,” I responded.
When I seemed to understand his profession, he looked at me differently.
“You must not be the only one. Last year, everyone lost money during the crisis. My clients were furious, too,” I continued.
Gillian shook his head.
“One person earned a massive profit. Your clients should look for a manager like that.”
Gillian was talking about Jonathan, but his words were not all positive. The frown on his face explained how Jonathan was evaluated in Wall Street, and thus, indirectly about me.
If an infinite number of monkeys sat in front of an infinite number of typewriters banging away, one of them might be able to type out the story ‘Hamlet’ by pure chance. My interventions in the financial world were treated like that. It was an implausible event where one was amazingly blessed like the monkey writing Shakespeare. People in Wall Street rationalized their failure by focusing Jonathan’s reputation on his fortune rather than his skill.
“Well, you are right, too. Every investor dreams of hitting a jackpot, but clients prioritize consistent profit and a strong mentality like you, Gillian,” I said.
“You’re saying that because you don’t know me. I lost a billion dollars,” Gillian responded as if he was confessing.
I said, “You have earned much more for the Morgan Group last year and the year before. And as I said before, the Asian financial crisis…was something very unusual.”
“Thank you. I never thought that I would be consoled like this,” his tone was a little sharp, contrary to what he meant.
“If you make a decision, I’ll convince the clients,” I responded.
“You’re going to establish it in England, right?” he asked.
“Yes, I’m planning to build on the Isle of Man,” I replied.
Gillian nodded at the famous tax haven as it was the right place. Then, he asked a question he should have in the beginning.
“How much funds are there for operation?”
“Fifteen billion dollars,” I answered.
Yet again, Gillian was not surprised.
I continued, “There is a directing team in the companies my clients own, and I promise you that they are amazing. My clients want you to follow the specific directions under the initial plan. We will hire you as the top executive trader.”
For a moment, I saw disappointment on Gillian’s face. He likely hoped for full authority over directing, but I offered him the same job he was currently doing in the Morgan Group. Their property management team worked like a machine and didn’t give freedom to a star player. Also, each team had their specialized fields, and much of the work was operated through computer programs.
“You must follow the investment plan, but we won’t interfere with the detailed directions and trading methods. We’ll let you manage all the funds as you wish under the plan as aggressively as possible and without repercussions,” I said.
I didn’t give him a chance to refuse.
“Some of my clients are willing to invest in you separately. Of course not now, but if you show results, then…”
I emphasized on the magic numbers to recruit Gillian into my team.
“They will gladly invest ten billion dollars.” I said.
As expected, Gillian’s expression revealed all of his inner thoughts, and his eyes were lost for a moment. The only reason why Gillian had stayed in the Morgan Group despite knowing his own genius talent was because of their ten billion dollars. Many investors had wanted to poach him to proceed with their investment plans, but he rejected them all only for that money.
“From the beginning, I promised myself I wouldn’t return until I get to manage ten billion dollars.”
As he mentioned in his lecture, Gillian succeeded in returning to England with the investment and established a global asset management firm in the past. Well, I messed up his plans, but it worked as the piece I could bring him in. I didn’t expect the butterflies of change to fly like that.
Gillian looked like he had made up his mind when heard about the fund amount, and I thought we had an agreement.
“You are not asking about my clients. That’s good,” I said.
He replied sardonically, “I’m not in a spot to do so. I don’t mind as long as it’s not drug money.”
As I expected, Gillian had stopped thinking things over. I wanted to look in the mirror since I felt like my feelings were expressed on my face.
“You don’t have to worry about that. My clients can support you with more funds once the investment firm is built on the Isle of Man. That’s what they do all the time,” I said.
Gillian nodded calmly. He had seen many billionaires like that before as the Morgan Group had many clients like them and the group itself was one of them. Also, he had met many people like ‘Ethan’, who had come from the tax havens. They were the trust companies’ lawyers from the Cayman Islands, and they were the world’s four largest accounting firms called the BIG 4.
Jonathan wouldn’t have had opportunities to encounter them in the past since he had been a small fry, but Gillian would have met them everyday. Therefore, I was not so special to him, and he had no reason to be nervous in front of me.
“What are the terms and conditions of the contract?” Gillian questioned.
I went over the deal, “Your commission will be three percent, and your annual salary will be a hundred fifty percent of your current income. The detailed information is…”
“No, I’m just curious about what happens for losses,” he interrupted.
“As I said, nothing if you follow the investment plan that the clients request. This point will be stated in the contract,” I responded.
“This is such an attractive offer. If I don’t follow the plan…I’ll be responsible for all the losses, correct?” he asked.
“Don’t test it. I don’t want a man like you going to jail,” I replied.
We both smiled.
“Of course not. I just wanted to check. So, if my profits are good, will I receive additional funds?” He questioned.
I shrugged. “I suppose so. I’ll prepare the contract by tomorrow, and let’s meet here three days from now.”
“Wait, what about the desk team? Do you guys have a separate trading team like the directing team?” he asked.
“There are three fixed appointments, and you can hire anyone you want for the rest of the team. You would need a lot,” I answered.
“That’s nice,” he responded.
“Then,” I said.
We shook hands and separated. The meeting was brief but impactful, and I could smile happily now.
***
Ironically, Jonathan was in Seoul while I was in New York.
<Jonathan: You didn’t have to go to New York. I had been expecting much since you said you’ll actually go there, but it was only for one property manager? Even if he belonged to the Morgan Group.>
It was natural that Jonathan was complaining. Gillian had become famous after receiving an unprecedented investment from the Morgan, and, until then, he had been only noticed inside the Morgan.
<Seon-Hu: I already made up my mind. I’ll let Gillian handle some of the offshore funds.>
<Jonathan: You have the best person, though.>
<Seon-Hu: Are you talking about me?>
<Jonathan: Who else?>
<Seon-Hu: I’m alone, and you’re busy running the New York company. The two of us can’t manage all the funds on our own.>
I pointed out the word ‘managing’, but Jonathan didn’t notice it.
<Jonathan: Gillian? What happens if he notices our paper companies?>
<Seon-Hu: He’s not interested, and no one knows where the funds are coming from. It would take several years even for the U.S. government to investigate.>
The probability was less than one percent as the offshore funds were difficult to chase by ninety-nine percent. The paper companies we had entrusted with the job had survived since World War Two, and we even used eight of them round-robin style.
<Seon-Hu: We will establish an investment firm on the British Isle of Man and use it as a base for Europe. You will soon find out that GIllian was the best option for the leader position.>
<Jonathan: When are you going to stop talking so formally?>
<Seon-Hu: Huh?>
<Jonathan: Age is not a big deal. You don’t seem that young anyway. So, let’s be…>
Things became silent for a bit.
<Jonathan: Friends. We could be friends, Sun.>
Jonathan said in a trembling voice.
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