Chapter 27 Flexing Muscles

"Mr. Carter looks very young. If Jessica hadn't told me that you have six million dollars in assets, I would hardly believe that I'm sitting in front of a millionaire right now," Julian Robertson began with a compliment as soon as he approached Carter. Facing such flattery, Carter had already heard enough of it today.

"Well, I've heard plenty of compliments like that. Hopefully, you realize that with these assets, I'm not just a simple young man. Don't take me for a fool. Let's talk business. If I were to open an account with your company, or even entrust funds, how do you, or rather, you plan to manage my assets?"

"Of course, Mr. Carter, you can rest assured. We are an honest brokerage firm, and I am an honest man."

Julian seemed immune to Carter's directness, casually brushing aside the remarks. Of course, Carter also shrugged off Julian's claims of integrity.

Before any deeper engagement, such words were taken with a grain of salt.

"Logically, when opening an account, in addition to a stock account, there would also be a cash account. The funds that Mr. Carter intends to invest will naturally be deposited here. Under no circumstances will we arbitrarily move cash from your account unless we receive your authorized instructions."

Opening a securities account always involves two accounts: a securities account and a cash account, no matter where you go. When you entrust the brokerage to buy stocks, after the settlement and transfer, the stocks will be stored in the securities account, and then the brokerage will transfer the money you used to purchase the stocks from your cash account to the seller's account. This process completes a full securities transaction.

Carter may not be particularly familiar with the financial markets, but he understood this trading rule. He nodded and waited for Julian to continue.

"As your stockbroker, I will only recommend stocks that I personally believe are most suitable for you based on your investment ideas and my understanding. Ultimately, the decision will always be yours."

After hearing this, Carter nodded. Julian seemed to have passed Carter's initial test of character. Although theoretically the broker should not interfere with the employer's decision, how many could actually do it? Especially when dealing with a group of laymen. Deception and manipulation were synonymous with stockbrokers in this era, just like Leonardo DiCaprio in "The Wolf of Wall Street."

Whether Julian was the latter or not, his current attitude towards Carter's requirements aligned with what Carter expected from a stockbroker. He could ask questions when he didn't understand, and the broker could provide advice, but ultimately, the decision to buy or sell had to be his!

"You're a bit too absolute, Mr. Robertson. Sometimes, my investment ideas may not be correct, and your persistence may not be bad. Positive communication and exchange are the most important in cooperation. Just don't take over my decisions. As long as you can do that, I think I'd be happy to work with you."

After a moment of thought, Carter spoke up.

He knew he was a financial outsider, and listening to the advice of professionals was crucial. After all, he only knew a few famous companies' futures, but what about the others on the market? Sorry, Carter hadn't even heard of them, let alone understood their details. Without understanding anything, how could he predict their future?

Carter's idea was to, based on his insight into the future development of various industries, work with a professional stockbroker to understand the market and specific companies and engage in some short-term operations to make some money, familiarizing himself with the market first.

If they had a pleasant cooperation in the future and a basis of mutual trust, they could entrust each other to pay attention to those companies that were essential to them. This would prevent the future source of wealth from slipping away right under his nose.

This was the reason why Carter was so careful in selecting brokerage firms and stockbrokers. He could only stay in New York for a limited time over the next two years, and once he left New York, he might not receive many updates. He needed a trustworthy partner in New York to keep an eye on market trends for him.

"You're absolutely right; positive communication is essential. Now, may I ask about Mr. Carter's investment philosophy? Or rather, when you choose a target, what are your criteria? What are your goals, long-term stable returns from stocks, or short-term high-risk, high-return futures?"

Julian's eyes lit up, showing excitement as he acknowledged Carter's views on communication, but also, he subtly felt a hint of opportunity. This big client seemed to be within his reach!

"My investment philosophy? Perhaps it's value. When I choose a target, I prefer to start by selecting an industry rather than a specific company. There are too many uncertainties about how a company will develop in the future, but when we look at an entire industry, there are fewer uncertainties. I choose an industry that I believe has a promising future, then delve into that industry and find a company with good management, no adverse records, and relatively reliable products. Such a company should have lower risk, and the chances of surviving to the industry's heyday should be greater."

After some thought, Carter gave his answer. He wasn't sure if this counted as an investment philosophy, but he adapted it from the future popular "value investing" philosophy, and then explained his own thoughts. He then asked:

"And what about you, Mr. Robertson? Given your age, you must have been in the financial industry for a long time. Over the years, when you choose targets, what criteria do you follow? Also, what companies' stocks do you currently hold? Or, by choosing to work with your company, how much room do I have for market operations?"

In stock trading, it's not just about buying low and selling high. Especially in a bear market, short selling or selling short is a more common way to make money.

Short selling is simply selling the shares of a company that you believe will fall in price in the future, essentially betting that the stock price of a company will fall. Then, you can borrow some of the company's shares and sell them, and when the stock price of the company falls, you can buy back the same shares at a lower price and return them to the lender. Essentially, it's buying low and selling high, but in reverse order.

The most important step in short selling is borrowing stocks! Where do you borrow stocks from? Stockbrokers or brokerage firms, trust companies, and some other financial institutions that hold the target stocks.

The principle of borrowing stocks is similar to borrowing money. Most people can borrow thousands or even millions without any problem, but if you want to borrow tens of millions, it's probably impossible. But if you're at the level of, say, Rockefeller, borrowing tens of millions of dollars is like a drop in the bucket.

Borrowing stocks is the same; you can only more easily, quickly, and efficiently complete short selling if you know enough people, have enough weight, or have enough connections with your stockbroker, trust company, or other financial institution that holds the target stocks.

In short, at this point, Carter wanted to see Julian's chips, his strength. Is he a horse or a donkey? Show me your muscles, let me see how capable you are as a stockbroker.