Chapter 235

Chapter 235 Beware of students failing in art

Buy one in Manhattan or build your own office building.

Abel has thought about this problem.

It was just that his attention to this area was then attracted by Hudson Bay City Plaza.

However, there are so many aspects to Hudson's Bay Town Square.

It is impossible to ride a horse for a short time. Meaning, the super headquarters that Abel wants to build won't appear anytime soon.

Every time Abel came to Smith Capital after expansion, he felt like the company was a little crowded.

After much consideration he felt before riding into the public square of Hudson's Bay.

First you need to find an office location spacious enough for your business.

Of course, the best way is to buy a building tall and wide enough in Manhattan or New York. This way, not only Smith Capital can be located there.

It is also possible to establish headquarters of companies such as Elizabeth Back Garden, ab Smith Entertainment, ab Smith Newspapers, amc television, Aircraft and Yacht Chartering, etc., which are also headquartered in New York.

That said, the number of businesses bearing the Abel name in New York is truly remarkable.

In addition, companies in Los Angeles and elsewhere also need to add branches in New York.

If we add this, there is only a company named Abel, and New York has more than a dozen companies. A Smith building is almost impossible to match with Smith Capital.

Not to mention other companies.

Abel no longer intended to wait until Hudson Bay.

He has no interest in rebuilding a new building.

Final consideration. Abel believes that directly purchasing a ready-made skyscraper today would be the best solution.

Anyway, as long as you don't buy Gemini, or other buildings besides Gemini, you should be fine.

Until that day, other places will be safe.

When people criticize Gemini, they don't do it blindly.

Who said that before that, the twins were respectively the tallest and second tallest buildings in the United States. This type of iconic building is located in Lower Manhattan. It would be a bit unreasonable not to fight them.

".Buy a building."

In the seating area of ​​Abel's office, barista David Mellon puts down his coffee.

"It's really necessary." David Mellon looks at it from Smith Capital's perspective.

According to David, Smith Capital, which employs fewer than 600 people, still needs to continue to grow. Not to mention that like Goldman Sachs, there are more than 20,000 vice presidents and the company's maximum number once exceeded 30,000.

They must at least resemble Wall Street giants like Merrill Lynch and Lehman Brothers, with five or six thousand employees.

With five or six thousand employees, the Smith Building had originally been full but no longer had enough space.

Although busier, the Smith Building can only accommodate about a thousand workers at most.

This is always a situation that can affect work efficiency. If you want to start Smith Capital, there will be an office that can be expanded in the future.

In Manhattan or New York, owning your own villa is a strict requirement.

Abel submitted the "Manhattan Property List" that Papa Ikana had given him.

He told David Mellon, "I want to buy the Woolworth Building."

The Woolworth Building is the former headquarters of Smith Capital.

This is a historic building, which was the tallest building in the world for 16 years. Built by Woolworth, America's former retail king.

More importantly, Abel now owns about 20% of the equity of this building.

This share valued Abel at nearly $300 million at the time.

And most of the shares in this building are in the hands of giant investment banks on Wall Street.

The percentage of shares held by Merrill Lynch is 12%,

28% is held by Goldman Sachs,

30% owned by Wells Fargo,

About 10% is held by minority shareholders. The remaining 20% ​​is in the hands of Abel himself.

Compared to other buildings, ranking the Woolworth Building is not too difficult.

For these investment banks, based on Abel's current relationship with them, they basically just need to give money.

About 10% of minority shareholders' shares must be sold following the general trend.

Since last year, real estate in the US has grown significantly. Last year, the Woolworth Building was worth about $1.5 billion.

There isn't $1.6 billion available this year, and there's no way to get it.

"The Woolworth Building?" David Mellon thought for a moment and then said:

"Even though it's a bit old, the area is really enough for use. It also has enough history and monuments.

Woolworth Building, total 57 floors.

At first, builder Frank W. Woolworth only plans to build 42 floors.

He later discovered that if it were a little taller, it could become the tallest building in the world.

To become number one in the world, he temporarily asked the designer to increase his height.

The original 42-story building has grown to 57 floors.

Frank W. Woolworth is also famous for being thrifty and calculating.

The additional 15 floors are much smaller than the original 42 floors.

They are located on the 42nd floor and take up about 1/3 of the floor space.

This makes the Woolworth Building look very nice from the front when completed and it is a standard Gothic Revival tower.

But seen from the back and side, it looks like an iron. The front is much higher and the back is completely flat. The front is like the handle of an iron and the back is a flat iron.

"Then it's definitely Woolworth." Abel simply said:

"I would ask Alan Baker to contact these shareholders later and try to move in before October."

This does not mean that if you buy the Woolworth Building you can live there directly.

One of Manhattan's most famous buildings, Woolworth's is located in the heart of Barclay Street and Broadway.

There are many companies renting offices here and many of them are famous companies. These companies' leases are at least several years and some can exceed ten years.

If you want to hire these companies, you need a certain quit fee and a certain amount of time.

Additionally, it will take some time to move companies with the Abel name, including Smith Capital, etc., into the Woolworth Building.

The interior of the building may also undergo certain modifications and decorations.

These delays add up and it is estimated to take about six months. After six months, New York is also safe.

Then move all the businesses here.

This is the reason why people in America and Manhattan panicked at that time.

Can also be combined with a hit like "Strong Manhattan Supporter".

After all, many multinational giants and financial companies were really scared and wanted to leave Manhattan. In other words, the US and New York authorities then made great efforts to ensure that a similar incident would not happen again.

Only then will Manhattan not become a ghost town overnight because of panic.

Having said that, Abel still remembers this incident.

Real estate prices in Manhattan, and indeed throughout the New York area, have been falling for several months in a row.

This is only the second year that Americans have witnessed the White House's determination and restored confidence in Manhattan and the New York area. Thinking of this, Abel felt it was time to leave the new starting point of real estate. After this incident, Manhattan will wipe out the property.

Abel plans to buy the Woolworth Building outright in his own name.

This way, even if you have to pay a certain amount of property tax every year, you can spend 1.6 billion US dollars in one go.

Such a large profit will be converted into investment. When it's time to file your new tax return, things will get a little easier.

While drinking their favorite coffee, the two discussed Smith Capital.

Smith Capital without Abel makes a big move.

Its appeal to investors in the real market is not very strong.

Because investors initially came to Smith Capital because Abel could give them high returns. Without this relationship, Smith Capital would not have many advantages over other Wall Street giants.

On the contrary, due to factors such as brand, channel and transaction point, this is a huge disadvantage.

Not all of Goldman Sachs' 20,000-plus vice presidents stay in New York.

Most of them are scattered across America and even the world.

Simply put, these giants have a lot of branches. These branches have attracted a significant number of customers.

This is not the case with Smith Capital.

The only investors it can attract today are those located near New York.

There are also rich men who come in the name of Abel.

This also makes up Smith Capital, excluding a handful of private equity funds for which Abel is a fund manager. Other financial products and investment products are not strong enough to attract customers.

David Mellon had nothing to do with this situation.

This can only be done step by step, after establishing a foothold in New York.

Next in other cities, we will continue to increase business locations and branches.

Thinking about it, Abel made a suggestion:

"Maybe we could add a currency fund?"

"Monetary Fund?" David Mellon says:

"At the front, among our financial products, there already exists a currency fund."

When it comes to money market funds, the Chinese rabbit probably thinks of "Ye Bao" first. But in fact, the monetary fund is not the first thing for the old horse.

It appeared in the 1970s and 1980s.

From the early 1970s to the 1980s.

The United States is in a "stagflation" environment, characterized by economic recession and high inflation.

At that time, the Soviet Union was strong, the United States was weak, the Soviet Union attacked, the United States defended. The strong and powerful red bear made the whole European and American world shudder.

At that time in America, even capitalist newspapers like "Wall Street Journal" "corrected, discussed, asked" and "asked people in America to wait". They all suspected this line was fake.

Due to economic problems, the Federal Reserve at that time regulated interest rates on bank deposits.

This causes people's deposit interest rates to be even lower than the inflation rate and deposits become devalued.

Inflation in the United States at the time was running at 20% or more.

At that time, to attract capital, banks launched high-value certificates of deposit with interest rates higher than the inflation rate. However, the starting amount of this type of term deposit certificate is relatively large and the minimum investment unit is usually 100,000 or 1 million USD.

At that time, only a few institutional investors or wealthy people had enough liquidity to make such investments.

For most Americans, the only financial investment products available these days are bank savings accounts, stocks, and bonds with pitifully low interest rates.

When times are tough, people often look for safe, highly liquid assets.

However, many financial assets are too risky, illiquid, or provide too low returns. In short, they cannot meet the financial needs of investors.

At that time, Ruth Bant, director of the cash management department and credit analyst of the world's largest pension fund "Teachers Annuity Insurance Company".

He came up with a great idea after doing extensive research on the financial services industry.

He founded a mutual fund called "Thrift Fund Company" in 1970, which was approved by the United States Securities and Exchange Commission in 1971 to sell financial products to the public.

In October 1972, Savings Fund Corporation purchased $300,000 in high-yield term savings. At the same time, it is sold to small investors with investment units of 1,000 US dollars.

This way, small investors benefit from investment returns that only large companies can achieve, while also benefiting from greater cash liquidity. The first currency mutual fund in history was born.

Since then, similar money market funds have appeared one after another, and this was not new in 2001.

Even Smith Capital itself, the multiple financial products developed by David Mellon and its executives, has funds. Fortunately, David adapted to his boss.

David knew Abel was like a god in a high-stakes transaction.

But Abel's knowledge of general financial matters is actually average, perhaps worse than many finance students at universities.

Therefore, David did not feel regretful about Abel's proposal.

"No no no no."

Abel shook his head: "The money fund I am talking about is different from traditional money funds.

After thinking for a moment, Abel added: "To be precise, the foreign exchange fund I'm talking about should be called "Virtual Currency Fund".

"Virtual currency fund? »David Mellon was a bit confused.

Money market funds are money market funds, can they be virtual? David had no idea that there would be such a thing as virtual currency in future generations.

Cut all the leeks in the world to death.

"Individual investors, small and micro family investors, these micro investors, through which channels do they often invest in stocks and funds? » Abel asked.

"Go to a local bank or securities company to open an account. Then go through their securities manager to fulfill their investment requirements." David Mellon said. That's how investors in the US and around the world have bought stocks and funds for nearly two hundred years.

"So how do they contact their investment managers?" » Abel asked in a convincing voice.

David Mellon thinks about it:

"Usually it's a phone call. In the old days there were faxes and telegrams. Or go directly to the securities company to find an investment manager. But now the Internet exists and some securities companies have tried to communicate with their customers on the Internet.

"It's not wrong." Abel put down his coffee and tapped on the table: "That's it, Internet!"

"The virtual currency fund I am referring to is a new method of foreign exchange fund trading that requires the use of the Internet."

Abel said:

"As far as I know, as early as 1995, online stock trading began to appear on the New York Stock Exchange. But widespread dissemination would only take place in 1998, which was three years."

"The actual opening of an Internet account has not yet appeared. To open an account, customers must also contact a securities company or bank. Then the securities company or bank provides a gateway to conduct transactions on the Internet.

"But strictly speaking, until now. This type of transaction was actually notifying the investment manager over the phone, but now it's notifying the investment manager over the Internet."

"Next, I think Smith Capital can completely move all financial products that allow small investments, such as foreign exchange funds, to the Internet. In the future, even account opening and trading can be done directly over the Internet. »

"What Smith Capital needs to do is maintain our network. In big cities that have nodes, add a few branches."

"This way, we don't have to open as many stores as Goldman Sachs. We can find ways to attract customers from the Internet as much as possible."

Abel didn't know exactly what to do.

But before his reincarnation, he bought things like Yu'e Bao and Yu Li Bao.

I also bought stocks on some brokerage software. Abel explains to David Mellon the main points of Internet brokers like Yu'ebao, choosing what he can explain clearly.

Gradually, David Mellon understood what Abel meant.

"Oh, boss, you mean directly selling microfinance products such as money market funds on the Internet?"

David Mellon said: "Open an account for them directly on the Internet? Trading directly on the Internet?

Abel nodded, "Perhaps that's the intention, but the specific operations, feasibility and so on, you need to measure yourself to see if you can do it or not."

To put it bluntly, what Abel said is the prototype of an Internet broker. In fact, some on Wall Street have now explored this model.

Abe also met with the founder of the company that was tinkering with this model.

Robert introduced Thomas Peterffy's Interactive Brokers to Abel at the final reception at Morgenthau.

Interactive Brokers started as a trading tool and even the computers and systems of the New York Stock Exchange were configured by Interactive Brokers.

Interactive Brokers is a pioneer in computerization and internetization of the US financial market. Even the online stock trading done in 1995 was the first trading launched by Interactive Brokers.

It's just that there are limitations of the times, even if Interactive Brokers has a different vision.

At that time, the Internet brokerage business had not yet begun and Thomas Peterffy was still poking around.

Abel, from 2022, is much simpler.

Thomas Peterffy of Interactive Brokers is still looking for an Internet 1.0 broker.

is the basic version built on the Internet using computers. The method proposed by Abel is already an Internet 2.0 broker.

It is full version based on mobile internet and smartphones.

In today's technical and Internet conditions, version 2.0 is of course unattainable.

However, many trading concepts of version 2.0 are optimized based on version 1.0 of Internet brokers.

Slightly changed the features that are not suitable for today's Internet but only for mobile Internet. All of the things Abel suggested are completely doable at this stage.

You should know that the US population at that time was only 285 million people.

But the number of Internet users is already 110 million (other data is 90 million).

Suppose that out of about 100 million Internet users, one million are willing to invest.

Of the millions of people willing to invest, 100,000 chose Smith Capital. This also represents a huge customer base for Smith Capital.

Already very smart, David Mellon, who is also a Wall Street genius, knows everything.

After hearing his boss's thoughts, the more David Mellon thought, the more excited he became.

"Boss." David couldn't help but look towards Abel: "Luckily you studied art in college." If you studied finance or business in college, I think I'd be out of a job.

Abel understood what David meant and he spoke in a roundabout way. Luckily, Abel also knew it wasn't because of his intelligence.

It's just that I've been accumulating for more than ten or twenty years. I said it before for more than ten years.

It depends on the shoulders of the giants of that time, not on my intelligence.

So he just smiled shyly at David and said:

"Well, who told me that what I'm most interested in is actually art? If I failed the exam back then, I probably would have studied art or finance or something like that."

David Mellon complains:

"Then fortunately, boss, you didn't fail the exam." You should know that students who failed to enter the Austrian Academy of Fine Arts started a world war.

"If you fail, boss. Maybe it was the artistic failure at Rice University that caused the world war on Wall Street."

(end of this chapter)