Chapter 32: Black Monday (1)

A bull market.

“Bull” refers to the animal, not fire. A bull market (Bull Market) is a rising market; the bull charges upward with its horns.

The famous Wall Street bull statue symbolizes this.

‘The Charging Bull.’

A Wall Street landmark. But it didn’t exist then.

It was created after Black Monday.

Hoping to prevent another such crash, and to comfort investors who suffered massive losses, an Italian sculptor created it using his personal funds.

Perhaps that bull statue will grow even larger. A bigger bull market is needed to comfort people.

“A massive bear market is coming.”

After the Japanese market closed, I said this; no one disagreed.

They now understand. A bear market is coming—not just in Tokyo, but on Wall Street, and globally.

The three consecutive limit downs in Japan’s top three semiconductor stocks have shaken the market.

“Contact Ha Youngil. Tell him we succeeded. It’s 2 AM in New York, but he’ll be awake.”

Friday’s US market will be interesting. The major fall will be Monday, but the signs will be clear.

“Yes!”

Employees nod gravely, sensing the scale of the events.

-Clap.

I clap lightly, shifting the mood.

“Alright, let’s relax. Our work is almost done. Let’s celebrate.”

Cheers.

I playfully raise a glass of water in a toast.

This is for the US hedge fund. It’s preparation for Ha Youngil’s debut; we weren’t shorting the Japanese market for our own profit.

The Daeha Securities employees have nothing to do.

Ah, except for praising me.

“Wine?”

Champagne would be better…

“Absolutely not. You’re still a child, Miss.”

Sihyeon glares; I chuckle.

“I won’t drink.”

I don’t want to embarrass myself. A humiliating display would be truly suicidal.

“Grape juice is fine. I’ll watch you drink. Sihyeon, you too.”

I offer Lee Sihyeon a drink from Ha Jusung’s collection, smiling mischievously.

“…Is it okay to drink this?”

“Why not? I’m the owner. I gave your boss a huge favor; this is a small price.”

“Ah, Ha Youngil.”

That’s right.

The responsibility falls on Ha Youngil.

He’ll profit if he follows instructions.

More importantly, this must boost his hedge fund’s reputation. Many funds fail due to lack of reputation, regardless of skill.

“Let’s celebrate this weekend.”

The tightrope walk is over; time to watch others perform.

***

Wall Street, New York.

A young Asian man in a small office sits with clasped hands, having received a signal from Korea… He’ll execute the orders.

Even his loyal colleagues would discourage this.

“This is crazy.”

“Young, are you sure? Even with all these headwinds… this is…”

Ha Youngil calmly persuades his colleagues.

“The trend is clear. Headwinds are sufficient… We can’t wait. This is rational.”

October 14th. The Dow drops 3.8%.

October 15th. Iran attacks a US tanker. The index falls another 2.4%.

October 16th, Friday. Severe storms cause early market closure in London; three leading Japanese semiconductor companies hit limit down.

The signal arrives…

Massive put option buying begins immediately.

Across all stocks, utilizing maximum leverage.

“Trust me. The market will fall on Monday.”

A dark-skinned friend frowns.

“Why not short sell?”

“That risks margin calls. Leverage is almost 100x.”

100x leverage means a 1% rise triggers liquidation, regardless of future price drops.

That’s why trader skill is crucial… but he hasn’t reached that level yet.

Unlike leveraged short selling, buying put options only risks the premium. Time decay will reduce it…

But if the prediction is correct, it will work.

“You f***ing idiot! Who told you to use 100x leverage? Why go long until now if you were betting on a downturn…”

A valid criticism. No Wall Street madman would do this.

Or rather, those who do disappear quickly.

“I’m different. My analysis is perfect.”

Despite his words, he sweats profusely.

Will Yu Hayeon’s prediction be correct? Is this just a child’s overconfidence?

Is even her father being tricked?

…If she can trick her father, she’s an incredible madman.’

Ha Youngil clings to his faith in his father’s judgment.

Fortunately, he has a poker face; like Jeremiah, he proclaims throughout Wall Street.

-The US market is overvalued; a major crash is imminent.

His Wall Street connections offer rational assessments. Some are concerned; the market might drop 3% today. Did you buy puts? What? How much? You crazy bastard!

“You bought OTM at 20% below the price? …What’s the maturity date? Hedging, right? Your fund is long only… You switched to pure short this week?”

…

“Surely, it’ll rise on Friday, despite the downtrend.”

That was the reaction in the morning.

But…

After a McDonald’s lunch, the reaction changes. News of the Japanese semiconductor crash reaches Wall Street.

“Did you see the news? The Japanese market… Ha, Nomura really did it.”

“Youngil, did you know? The Daeha cartel, your father’s the CEO?”

Scoffing turns to interest; personal friendship shifts to interest in his background.

Finally, near the end of Friday’s trading.

The Dow drops 5%. The worst day ever for most; not for his fund.

“Young! Haha! We succeeded! A major crash! A 5% drop in a day… a record!”

While thrilled, fear predominates.

‘As she predicted. The index… dropped over 5%.’

And Yu Hayeon’s prediction for Monday’s Dow drop…

At least 22%, possibly 26%.

***

The weekend passes; a nightmarish day begins.

Screams and shouts fill the air.

Ha Youngil’s fund, and those who followed his advice, profited immensely…

But no one celebrates. They can’t.

No one dares show joy, facing the murderous glares directed at the sky and computers.

-Click, click.

The automated program relentlessly sells. Massive selling pressure builds. No one buys. No one dares stop the program.

Fear has seized the market.

Sell, sell, sell.

Only sell orders echo. Shell-shocked people roam Wall Street.

Even the Wall Street McDonald’s owner suffers losses; no one wants food.

Ha Youngil, now immensely wealthy, stares blankly. It’s surreal.

-Thud.

Someone falls from a building. People glance, then look away; they’re too exhausted to care.

After closing, $500 billion vanished from the US market in a day.

People cried.

Black Monday.

Wall Street’s worst day ever.

***

Tuesday morning, October 20th.

Waking up in the Daeha Securities CEO’s office, I smile at the neatly printed newspapers and magazines.

The employees look grim. Their cheers, shock, and fear—all praise—are enjoyable.

Even Lee Sihyeon, who’s unconcerned with economics, looks serious.

Understandably so.

[Historic ‘Black Monday’ Crash: Dow plunges 25.2% in a day, shaking global markets]

[Shock in New York, Dow plunges over 550 points… ‘Black Monday’ fear spreads]

[October 19, 1987, Wall Street froze. Black Monday’s aftershocks hit the world]

Wall Street has collapsed.