In Hong Kong, we build a global business empire

Chapter 804 Wall Street Has Its Rules
As soon as Lin Haoran finished speaking, a burst of suppressed laughter erupted in the conference room.

"It's just empty talk!" Charles White was the first to criticize.

He glanced at Lin Haoran sideways and said, "Mr. Lin, your successful experience in the Asian market is probably not very applicable in the United States, the world's most mature financial market."

At this moment, he seemed to be deliberately trying to forget Lin Haoran's achievements in the American financial market.

Among the executive directors present, some seemed thoughtful, some looked displeased, and some were simply surprised that this new director dared to challenge mainstream views so directly in his first meeting.

Several directors who were on good terms with Richard Miller echoed his sentiments:
"Mr. Lin's thinking is too conservative!"

"Waiting for a clear signal? By then, the opportunity will have already slipped away!"

“Citigroup doesn’t need a board member who only says 'no'.”

The meeting room was filled with doubts and ridicule directed at Lin Haoran.

Li Guowei watched this scene nervously from the audience, his palms sweating.

Richard Miller, whose face had been extremely unpleasant because of Lin Haoran's speech, was full of confidence when he saw the other directors stand up to support him. He retorted, "Mr. Lin, your concerns sound reasonable, but they are too conservative!"

Business decisions always involve risk, and waiting for so-called 'clear signals' often means missing the best opportunities! Citigroup's tradition is to seize opportunities amidst uncertainty!

Faced with the questions, Lin Haoran did not get angry, but calmly responded: "I am not against seizing opportunities, but I emphasize that before seizing opportunities, we need to more accurately assess the probability of risks and returns."

My suggestion is based on an analysis of the current complex economic environment and an understanding of the irrational aspects of the market.

Whether this experience is applicable remains to be seen; time will tell.

"We have already conducted multiple risk assessments. We have strong connections in Congress and inside information that allows us to seize the best investment opportunities."

"In comparison, our risks have been greatly reduced. If we hadn't conducted a risk assessment, this issue wouldn't even exist today!" Richard Miller retorted loudly.

Other directors also voiced their support for Richard Miller.

However, amidst the opposition, John Reed fell into deep thought.

His brows furrowed, his gaze shifting between Lin Haoran and Miller.

"Ladies and gentlemen," Reed finally spoke, and the conference room fell silent. "I think the risks Mr. Lin raised are indeed worth considering. The fiscal deficit problem in a high-interest-rate environment could indeed have a short-term impact on the market, so I think we need to be cautious."

We have just acquired a stake in Haifeng Bank and need to fully integrate and digest its assets. Furthermore, our investment returns in other areas this year have not been satisfactory.

If our investments fail again at this crucial time, our financial report this year will look terrible. How will we face our investors then?

John Reed's voice echoed in the conference room.

This statement was like a bucket of cold water, extinguishing the enthusiasm of some board members.

A brief silence fell over the meeting room. Several directors who had initially supported aggressive investment began to exchange glances, their expressions turning hesitant.

Walter Riston chimed in at the opportune moment: "John is right. We have already experienced two major investment failures this year. The failed acquisition in South Africa wiped out hundreds of millions of dollars of our initial investment, the Brazilian debt crisis cost us $1.2 million, and our bond portfolio in Europe has also performed poorly."

He surveyed the room and continued, "If there is another major mistake in this stock market investment, Wall Street will vote with its feet."

Richard Miller then spoke up: "Mr. Walter, Mr. John, it is precisely because our investments this year have not been satisfactory and the figures on our books are not good so far that we should take advantage of this great opportunity to go all out!"
Otherwise, the year-end financial report will be very bad, and how will we explain it to our shareholders then?

His voice carried a hint of urgency as his gaze swept over each of the directors present.

Charles White immediately chimed in: "Richard is right! A conservative approach will only cause us to miss opportunities. Now is the time for decisive action! Most importantly, we should trust President Reagan!"

This statement made Walter Riston hesitate.

After thinking for a moment, he said, "Mr. Lin's point of view is very insightful and does point out some risks that we may have overlooked. This issue is of great importance, so let's vote on it!"

As the voting began, the air in the meeting room seemed to freeze.

As each board member took turns expressing their support, voices of support for Richard Miller rang out one after another.

When it was John Reed's turn, he paused for a moment, then slowly said, "I abstain."

This decision surprised everyone present.

Finally, all eyes were on Chairman Walter Riston.

He placed his hands on the table, his brows furrowed slightly, his gaze shifting between Richard Miller and Lin Haoran.

The conference room was so quiet that you could hear the hum of the central air conditioning.

Walter Riston sighed softly. "As chairman, I must respect the opinions of the majority of the board."

He raised his hand: "I support Richard's proposal."

Walter Riston, as the chairman of the board of Citibank, naturally had vision, and he was almost convinced by Lin Haoran.

However, he ultimately also believed that President Reagan's policy rescue would definitely bring a strong upward trend to the stock market.

After all, such a large-scale tax cut is rare in American history, and its stimulating effect on the economy should not be underestimated.

This made him very hesitant, but he ultimately chose to follow the crowd.

“Director Lin’s analysis makes a lot of sense, but we must also recognize that the strength of this policy is unprecedented. I believe that short-term market fluctuations will not change the long-term positive trend,” Walter Riston added after voting.

This result subtly changed the atmosphere in the meeting room.

Richard Miller couldn't help but smile, while Charles White glanced at Lin Haoran with barely concealed smugness.

“Since this is a collective decision by the board,” Walter Riston looked at Lin Haoran, his tone tinged with apology, “Mr. Lin, I hope you can understand that Citibank’s tradition has always been to respect majority decisions.”

Lin Haoran remained calm. He knew that Walter Riston said this, but in reality, he didn't believe his words.

He smiled slightly and said, "Of course, I respect the board's decision-making process. However, I suggest that a strict risk monitoring mechanism be established during implementation, with weekly reports on the portfolio's performance."

This suggestion caught Walter Riston's eye: "Very professional advice. Let's do it your way. Let's adjourn the meeting here."

The meeting ended in a delicate atmosphere.

As the directors began to leave, Richard Miller deliberately stopped at the door to wait for Lin Haoran: "Mr. Lin, Wall Street has its own rules, and the game here may be played differently than in the Asian markets you are familiar with."

“Thank you for the reminder, Director Miller. I believe that in any market, fundamentals and economic laws will ultimately prove everything,” Lin Haoran replied neither humbly nor arrogantly.

“We’ll just have to wait and see.” Richard Miller smiled meaningfully and turned to leave.

He could already imagine how ugly Lin Haoran's face would be when the company made a fortune in the stock market.

Thinking of this, Richard Miller's steps became lighter.

He could even picture the scene when the quarterly financial report was released: the board of directors would be full of praise for him for the generous investment returns, while Lin Haoran would be left standing on the sidelines, feeling ashamed of his initial "conservative" and "wrong" judgment.

Lin Haoran watched him leave, his eyes calm and unwavering, until the figure disappeared around the corner of the corridor before leading Li Guowei in another direction.

After a long day, he planned to go back to the hotel to rest first. There was no rush for what to do next; he had plenty of time.

Standing at the elevator entrance, Li Guowei couldn't help but ask, "Boss, wasn't your statement today too risky? It will offend many senior executives at Citibank, which will hinder our integration into this core of power."

"Oh? Mr. Li, where do you see the risk?"

“Isn’t it obvious?” Li Guowei counted on his fingers, “Charles White is clearly leading the charge against you;
Richard Miller, by directly rejecting his core proposal, you are essentially slapping him in the face in public.
And there were several other directors who echoed your sentiments; you've offended almost all of the executive directors in one fell swoop!
"We're new here and our foothold isn't yet secure. Won't this create too many enemies, hindering our future work?"

His concern was genuine and heartfelt.

In his view, when entering a new environment, especially a deeply entrenched financial empire like Citibank, one should act discreetly and integrate gradually, at least on the surface maintaining a harmonious atmosphere.

For someone like Lin Haoran to so clearly and unflinchingly challenge mainstream opinions at the very first formal meeting is almost a "suicidal" act.

Most importantly, Li Guowei is also unsure whether the US stock market will actually decline after the implementation of various Reagan economic policies.

After all, such a large-scale tax cut is unprecedented, and the market's optimism is not entirely unfounded.

Most importantly, Li Guowei was not a time traveler, unlike Lin Haoran who had memories of two lifetimes and could clearly foresee that the US stock market would not experience the expected surge in the early stages of Reaganomics.

Instead, it experienced a significant decline due to problems such as high interest rates and fiscal deficits.

Lin Haoran saw Li Guowei's worried expression and understood his unease.

He couldn't openly admit his identity as a time traveler, but he could use more compelling reasons to bolster his subordinates' confidence. "President Li, I understand your concerns, but have you considered that if we go with the flow today and agree with their radical proposals, we might gain some superficial harmony in the short term?"

But if the market does indeed experience a significant correction as I predict, and Citigroup suffers huge losses, how should we, the 'supporters,' then conduct ourselves?

To admit our misjudgment or to shirk responsibility? Either way, we will lose all credibility, which is the only way to truly be unable to stand at the core of power.

Besides, don't you feel it? Even if we agree with them, quite a few executive directors still harbor resentment towards us; we're not very popular here!

He paused, letting Li Guowei process what he had said, before continuing, "On the contrary, like today, I clearly pointed out the risks and offered prudent advice."

Even if the board of directors ultimately does not adopt it, we have fulfilled our responsibilities as directors by leaving a clear and independent judgment in the meeting minutes.

This in itself is a stance—a professional stance of not blindly following others and having one's own opinions.

Li Guowei's eyes flickered slightly, as if he had caught his boss's deeper intentions.

Lin Haoran further analyzed, speaking with certainty: "As for market trends, we cannot only look at the superficial benefits of policies, but also need to analyze the complexity of their implementation and the real constraints they face."

Where will the money for massive tax cuts come from? How will the market view the huge fiscal deficit? Will the Federal Reserve dare to easily loosen monetary policy in order to combat inflation?
In a high-interest-rate environment, the financing costs for businesses and the attractiveness of government bonds will create a siphon effect on funds in the stock market and put pressure on valuations.

He paused for a moment, allowing Li Guowei to process the information, before continuing, "Miller and his team overestimated the immediate effects of the policy, while selectively ignoring these enormous obstacles that cannot be circumvented in the short term."

Market sentiment is like a spring, currently pushed to the extreme of optimism by expectations of a 'Reagan revolution.' Any data or event that falls short of expectations could trigger a sharp correction.

Li Guowei nodded thoughtfully, but a hint of doubt remained between his brows: "Boss, your analysis makes a lot of sense. But what if, I mean what if, the market's optimism lasts longer than we expect?"

Or what if the policy really has an immediate effect? ​​Then wouldn't we be...?

"There aren't that many 'what ifs.' I trust my intuition. Since entering the business world, I've been able to build this career because of my intuition, my unique insights, and my courage to stick to my own opinions."

Overestimating its capabilities, it acquired Qingzhou Yingni; it swallowed Hongkong Land Group like a snake trying to swallow an elephant; it went long on gold in New York; it positioned itself in crude oil before the oil crisis; it even acquired Huifeng Bank…

Which of these projects wasn't accomplished amidst skepticism and even ridicule? And what was the result?

These words instantly reminded Li Guowei of the numerous business miracles created by Lin Haoran.

Indeed, every time everyone thought it was impossible, Lin Haoran always managed to turn the tide with his extraordinary foresight and courage.

He was suddenly horrified to discover that Lin Haoran had been in the business world for more than three years and had never suffered a single defeat, not even a minor one.

This discovery gave Li Guowei a jolt.

He carefully recalled the events, from the initial acquisition of Qingzhou Yingni, to the later acquisition of Hongkong Land Group in a swift and decisive manner, to the precise strategic positioning in the New York gold market and the oil crisis, and even the recent takeover of Huifeng Bank.

Lin Haoran took every step with extreme danger, yet he always managed to escape unscathed, ultimately ending in a stunning victory.

“This time is no exception.” Lin Haoran’s voice pulled Li Guowei back from his memories. “Miller and his team were misled by the superficial policy halo, but ignored the most basic economic laws.”

Excessive optimism is the greatest risk; when everyone is crammed onto one side of the ship, a wise helmsman should foresee the danger of capsizing.

He patted Li Guowei on the shoulder and said earnestly, "On Wall Street, the way to gain respect is not through flattery and compromise, but through accurate judgment and the courage to be different."

What seems like a risky move today is precisely the fastest and most effective way for us to gain a foothold in this financial empire.

Li Guowei finally understood Lin Haoran's deeper meaning.

This is not a confrontation on a whim, but a well-thought-out strategic plan to establish unshakeable authority through accurate market predictions and to win the final say through exceptional investment acumen.

“I understand, boss. So what preparations do we need to make now?” Li Guowei looked at his boss solemnly.

“There’s nothing we need to do. Right now, there’s not much we can do at Citibank. After all, we’re just nobody, and my opinions aren’t supported. Even if we do more, it won’t make a difference. Perhaps it’s time for Citibank to learn a big lesson. Only then will they truly understand who’s right.” Lin Haoran’s voice was calm but meaningful.

Li Guowei seemed to understand: "You mean..."

“That’s right.” Lin Haoran nodded slightly. “Sometimes, the best way to persuade someone is not to argue, but to let the facts speak for themselves. Time will prove everything.”

Since they insist on jumping into this pit, let them jump. When they fall and get hurt, they will naturally remember that someone warned them today.

What we need to do now is increase our influence so that we can have more say in things at Citibank. Perhaps after this incident, our position at Citibank will be completely different.”

As the elevator arrived and the two stepped inside, John Reed strode over, panting, and said loudly, "Mr. Li, please wait!"

Lin Haoran withdrew his foot from the elevator, turned to John Reed, and asked in surprise, "Mr. John, is there anything else?"

Reed took a deep breath, put on a sincere expression, and said, "Would it be convenient for you two to sit in my office for a moment? I have some questions I would like to ask you privately."

Lin Haoran exchanged a glance with Li Guowei, then nodded calmly: "Of course, Mr. John, it is our honor."

Follow John Dee to his office on the top floor of the building, where you are greeted by a spectacular view overlooking Manhattan.

He had been to this office many times before, so he was quite familiar with it.

"Would you like something to drink? Coffee? Or tea?" Reed asked, trying to lighten the mood.

"Just some plain tea will do, thank you." Lin Haoran maintained a polite smile.

Li Guowei nodded to indicate that he wanted tea.

After the secretary prepared the drinks and left, only the three of them remained in the office.

Reed stopped beating around the bush and got straight to the point: "Lin, please forgive my directness, but in the meeting just now, your views were very clear, even isolated."

I'm curious, what makes you so certain that the stock market will fall instead of rise after the implementation of 'Reaganomics'? You see, the market is almost entirely optimistic right now.

Lin Haoran gently put down his teacup, his gaze calmly meeting Reed's scrutinizing eyes.

“Mr. John, thank you for your frankness. My judgment is not based on feelings, but on an analysis of economic laws and the current special circumstances. First of all, we must recognize that the core of ‘Reaganomics’ is large-scale tax cuts and increased military spending, which will inevitably lead to a sharp expansion of the fiscal deficit,” Lin Haoran said very directly.

John Reed nodded: "We all agree on that, but it's generally believed that the additional tax revenue generated by tax cuts to stimulate economic growth can partially offset..."

“That’s how it is in theory,” Lin Haoran interrupted, “but there’s a crucial time lag issue here. The effects of tax cuts are immediate, and fiscal revenue will decrease instantly.”
The increase in tax revenue resulting from economic growth takes time, possibly six months, a year, or even longer.

During this time lag, the massive fiscal deficit will become a harsh reality that the market will have to face.

He crossed his legs and continued his in-depth analysis: "Secondly, and I think the most fatal point, is that the Federal Reserve's monetary and fiscal policies are going in opposite directions."

In order to curb the still high inflation, Chairman Volcker will not easily loosen monetary policy, and the high-interest-rate environment will continue.

Mr. John, please consider this: on one hand, the government is borrowing heavily to fill the deficit, driving up the demand for funds; on the other hand, the central bank is maintaining high interest rates to control inflation. What will this lead to?

Reid frowned: "Interest rates will be pushed up further..."

“That’s right!” Lin Haoran said with certainty. “Corporate financing costs will become extremely expensive, which will directly hit the vitality of the real economy and at the same time greatly suppress stock market valuations.”

He paused, then emphasized, "More importantly, when the yield on 10-year Treasury bonds reaches 12% or even higher, risk-free fixed-income products will become extremely attractive, and a large amount of funds will withdraw from the stock market and move into the bond market. This siphon effect cannot be ignored."

Li Guowei listened attentively. Although he had heard similar analyses before, Lin Haoran's arguments were more detailed and targeted in this private setting, in front of key figures at Citibank.

Reed fell into deep thought.

After a long pause, he finally spoke: "Your analysis makes a lot of sense, but market sentiment and fund flows can sometimes deviate from fundamentals."

Lin Haoran continued, "That's the third point I wanted to make: market psychology! Mr. John, don't you think the current optimism has gone too far?"
The 'Reagan Revolution' has been given too much hype, and market expectations have been raised to unrealistic levels.

Any economic data or corporate earnings that fall short of expectations could trigger a sell-off.

When reality fails to meet excessively high expectations, the correction will be drastic and ruthless.

He looked John Reed in the eye and said sincerely, "I understand the thinking of most members of the board. They all want to seize this seemingly certain opportunity and create outstanding results for Citigroup."

But sometimes, the greatest risks lie precisely in the most certain opportunities. In the investment world, when everyone is rushing in one direction, wise people should stop and consider whether they should choose the opposite path.

The office was quiet except for the slight hum of the central air conditioning.

John Reed stood up, walked to the floor-to-ceiling window, and gazed at the skyscrapers of New York City outside.

After a long while, he turned around, his face showing a determined expression.

John Reed walked back to the sofa and said, “Lin, your analysis convinced me. Although I cannot change the board’s collective decision, as an individual and as a manager responsible for a part of the business line, I have decided to take some action.”

(End of this chapter)