Chapter 55 I Believe that Human Nature is Evil
Li Feng turned on the computer and entered 113001. The name of the Bank of China convertible bond instantly popped up on the trading software.
"Bank of China convertible bonds? What are these?"
Liu Ying and Lin Menghan saw it and looked at each other, both a little puzzled.
Li Feng opened Baidu and introduced:
"This is a convertible bond. Simply put, it's a special bond issued by a listed company. You can think of it as a bond with a call option attached. Investors can choose to convert it into shares at a certain time."
"Its current price is 102 yuan, which means that when it matures next year, Bank of China will redeem the principal and interest of this bond in full. So it is an investment with a guaranteed bottom line, and the loss is controllable."
Liu Ying leaned over to the computer, looked at it carefully, and asked doubtfully, "You bought it for 102 yuan. Even if you get the principal and interest in the future, you won't make much money."
Lin Menghan also responded: "Yes, the interest rate is too low, only 2% in the sixth year. So, after all your investments, aren't you investing in vain?"
Li Feng smiled mysteriously and said:
"You may not know that the scale of Bank of China's convertible bonds is 50 billion yuan. This is a huge amount of money. Think about it, if you raised such a large amount of money from the market, would you return the money?"
Liu Ying and Lin Menghan were both stunned when they heard this, but they had not thought about this problem.
Li Feng continued:
"The problem with convertible bonds is that any company that issues them will try every possible means to get investors to convert their bonds into shares, writing off the bonds altogether. They won't buy back the bonds, as buying back convertible bonds requires real money."
"Take the Bank of China convertible bonds, for example. If you were in charge, would you let investors convert the bonds into shares, writing off the 50 billion yuan in financing? Or would you choose to shell out another 50 billion yuan yourself to buy back the convertible bonds?"
"Think about it, this is 50 billion, not 500 million, nor 5 billion."
Liu Ying thought about it seriously and said, "I naturally don't want to spend the money I raised with my own ability."
"Right!" Li Feng said, "In fact, even if we wanted to pay it out, I'm afraid we couldn't. The 50 billion yuan raised has already been spent. So the only option is to let investors convert the debt into shares and write off the debt."
"And in order for investors to convert their shares, the stock price must be higher than 130% of the conversion price for 30 consecutive trading days!"
"There are so many ways to do this. We can release favorable news, do financial analysis, or even hire someone to manipulate the market to drive up the price. We can also lower the conversion price, and so on. In short, this is not something we have to worry about."
"Remember, ever since convertible bonds were issued, not a single company has successfully converted all the raised funds into shares!"
Hearing this, Lin Menghan muttered to herself, "You're just gambling. Will the Bank of China convertible bonds be converted into shares? But, what if it doesn't work?"
Li Feng said confidently:
"I believe that human nature is evil, especially capital, which is greedy and bloodthirsty. It is impossible to take out the 50 billion yuan that has been put into pockets!"
"Of course, if they really do take out the money and redeem the bonds, my loss won't be too great. I did some preliminary calculations. With 500,000 yuan and 10x leverage, I hold 5 million yuan worth of Bank of China convertible bonds. Three scenarios could arise."
"The first scenario, which is the worst and least likely scenario, is redeeming the bonds at maturity. I would only lose a little over 300,000 yuan, a loss I can accept."
"The second scenario, which could happen, is if the stock price remains above 130% of the conversion price for 30 consecutive trading days. In that case, I would make a profit of around one million."
"Another big possibility is that a bull market will occur in the future, and the value of Bank of China and its convertible bonds will skyrocket! Then, the 5 million convertible bonds I hold should also skyrocket in value. My profit will be in the millions. Not to mention getting married and buying a house to pay off my debts, even buying a few more houses wouldn't be a big deal."
"I'm risking a potential loss of over 300,000 yuan for a chance at financial freedom. Do you think it's worth it?"
Liu Ying and Lin Menghan were fascinated by what they heard and did not speak for a long time.
However, I did not expect that there would be such good investment opportunities in the stock market.
After a long while, Lin Menghan came back to her senses and asked, "Bull market? Are you saying that a bull market is coming?"
"Yes!" Li Feng said, "When IPOs were restarted at the beginning of the year, I said I heard the bull market coming. With the recent frequent policy announcements, I can already hear the horn of a bull market!"
Liu Ying was confused after hearing this. She looked towards the trading hall next door. There were only a few stockholders watching the market.
At this moment, she felt that the bull market was coming and everything seemed so unreal.
Li Feng continued, "You must remember that, at any time, a bull market is essentially a monetary phenomenon. We must keep a close eye on policy, especially the faucet that controls the currency."
"Look at the recent policies. There was a targeted reserve requirement ratio cut in April. More importantly, real estate regulations have begun to be relaxed, with several cities starting to loosen restrictions. All these signs indicate that our country's monetary policy is shifting towards easing."
"As the saying goes, a rising tide lifts all boats. More money in circulation will allow the stock market, like a ship, to set sail..."
In the stock market, everyone hopes for a bull market, everyone is looking forward to a bull market, but no one is sure when the bull market will come.
At this moment, Li Feng used this theory to predict the arrival of a bull market, which made Lin Menghan and Liu Ying a little unbelievable.
Li Feng saw the expressions of the two people and knew that they didn't hear much at all.
The stock market is a place where true knowledge can only be gained through practice.
Only by truly experiencing at least two rounds of bull and bear markets can you know when the bull market will come and when the bear market will come, and how to operate in the bull and bear markets.
Unfortunately, few people can persist through two bull and bear markets.
Most people were eliminated in the first bull and bear cycle. Many of those who survived fell in the second bull and bear cycle, and very few actually survived.
"Do you guys want to invest some money?" Li Feng said with a smile.
"This, this, ten times leverage, I'm afraid my heart can't take it..." Liu Ying said, patting his chest.
Li Feng said, "You can use the leverage of positive repurchase as collateral. After deducting the bond interest, the annual interest you need to pay is not much. You dare not use a leverage of about 2.4 times?"
Lin Menghan did some calculations in her mind and said, "Low risk, high return, I'll use this method to buy some!"
Liu Ying hesitated for a moment and said, "Let me think about it."
After a pause, she rolled her eyes and continued, "Brother Li, do you mind if I send this investment idea to the group?"
"It's okay, just post it. Even if you do, how many people can truly understand and do it?" Li Feng said, "You two can watch the market first. I'll go find the boss and see if this stock trading competition can raise funds."
After saying that, Li Feng went to the third floor, knocked on the door and met Gan Yitong.
As soon as I explained my purpose, Gan Yitong's face was filled with smiles and he agreed readily.
Stock allocation is a star business that the company is launching. If Li Feng wants to raise funds in the real-time trading competition, that is what he has been longing for.
At that time, you only need to do a little publicity and guidance yourself, and you will be able to make the business bigger and stronger.
Gan Yitong waved his hand, gave the green light, and got the job done on the third day.
With ten times leverage and loan discounts, the annual financing interest rate is only 8.5%.
Li Feng directly bought all the convertible bonds of Bank of China at a cost of 102.5 yuan.
When this incident happened, everyone who heard the news was instantly shocked!
————
I would like to use this chapter to pay tribute to A Tu Ge and the Jisi Lu Forum.
Looking back at that amazing battle now, it still makes people's hearts surge and they can't help themselves for a long time.
————
Move your lucky hands and send a wow for free for love.
Your support is my motivation to update
Continue read on readnovelmtl.com
