The story about selling water that most people think of is the famous tale of Kim Seon-dal.
Kim Seon-dal tricked merchants by pretending to be the owner of the Daedong River, bringing along a few accomplices to act as shills. He sold the river’s water to those merchants and made a huge profit.
I’ve always liked that story.
***
What is a futures contract?
The basis of derivatives: futures, options, and swaps. Among these three, futures, as its name implies, are contracts dealing with the future.
Instead of buying and selling what is currently in the market, you buy and sell things that will exist in the future.
Why bother doing something like this? Well, for agricultural goods—whose supply is inflexible compared to mass-produced factory goods—it’s quite common. The very first futures markets usually began with agricultural products like corn or rice.
The nature of agricultural goods means that a certain level of demand is absolutely necessary, yet you can’t simply increase the supply whenever you want. So, once there’s a shortage of rice, the price shoots up like crazy. After all, people can’t live without eating.
Middle-school social studies only teach you economics up to this point.
But in reality, how does price elasticity get handled? Well, it’s the suppliers who end up tearing their hair out.
There’s a reason why people say that even if salaried office workers or civil servants are mocked for being “glass wallets,” they still have it better than self-employed people. A stable income is extremely important for household finances.
A stable income means you can calculate your future and don’t have to pour extra resources into risk management.
So, some clever farmers decided to sell their produce at a fixed price in advance. They didn’t know how prices would change in the future, but they wanted to receive money regularly like salaried workers.
The middlemen, in exchange for taking on the risk of falling prices, would get to keep all the profits if prices rose.
Strictly speaking, using agricultural goods as an example is closer to a forward contract rather than a futures contract, since it’s a private agreement. But you can think of futures as a financialized version of that.
A private agreement between a single farmer and a single distributor can feel a bit sketchy—like someone might run off with the money.
Anyway, for the suppliers, it was a worthwhile trade. That’s why the futures market developed.
“We’re going to do crude oil futures.”
I said this after calling together a small team at Daehwa Securities, where I had returned to work after a while.
“Futures? You mean WTI (West Texas Intermediate) futures?”
“Yeah. I think... it’s about time for the futures market to really grow.”
As far as I know, the crude oil futures market exploded around 2003. As I said before, the futures market originally existed as a risk-hedging tool between suppliers and buyers, but once speculation mixed in, it expanded rapidly.
Right now, it’s August 1997, so there’s still quite a while to go before that explosion. But who am I?
The greatest genius in history.
The pioneer of derivatives.
The Queen of Wall Street.
Yoo Ha-yeon.
[The WTI Futures Market Rapidly Changing Due to the Shale Revolution...]
[August Crude Oil at $13, Uncertain Future Despite Rebound. OPEC Maintains Production Increase Policy]
[Russian Oil Dumping... Will European Pipelines Be Paralyzed? Northern European Countries Rapidly Expanding Pipeline Construction]
The futures market grew much faster than it did in actual history.
That was my doing.
Thanks to my repeated little interventions in global finance, the current economic landscape felt like the world had been flipped upside down multiple times.
‘Still, people are surviving... for now.’
Alan Greenspan, the Chairman of the U.S. Federal Reserve, had recently cut interest rates down to 1%. Considering that just a year ago rates had been over 10%, that was extraordinary. When annual yields are only a bit above 1%, there’s no reason not to borrow money.
And with the Shale Revolution I artificially triggered, oil prices had dropped.
Thanks to that, even with the East Asian Financial Crisis, the Russian Moratorium, and the Dotcom Bubble collapse, the U.S. managed to scrape by.
Back during the LTCM crisis, Wall Street financiers had been wailing about having no money, but now they were laughing, enjoying the benefits of the Glass-Steagall Act repeal.
They’d been beaten bloody by me three years in a row, yet they were still grinning.
‘Maybe it’s because everyone who got hit properly is already gone.’
Even Stanley Miller—yes, the same man who helped me when I first invested a mere 100 million won in options twelve years ago—had recently resigned.
He lost billions during the Dotcom Bubble burst. He’s now running another hedge fund with decent returns, but I couldn’t recruit him for Alpha Fund—a pity.
Anyway, if a Wall Street legend like him took losses like that, what about everyone else? Plenty were forced into early retirement without any chance of recovery.
The only ones left are now rabid and desperate for quick fortunes. With just a bit of nudging from me, the futures market’s growth was inevitable.
“Crude oil, huh... But isn’t Alpha Fund going to move on this?”
One of the recently promoted employees at Daehwa Securities asked. Given how much the futures market had grown lately, Daehwa Securities was still relatively small.
“It can’t move too openly. And this time, it’s you guys doing it, not me. We can’t rely solely on Alpha Fund forever.”
“Uh... But isn’t Alpha Fund owned by you, miss?”
“Even if it’s mine, that doesn’t change the fact that we can’t depend entirely on it. And Alpha Fund isn’t completely mine, anyway.”
If I had to give an analogy, Alpha Fund was like a top-tier, must-have newbie character in a gacha game.
Meanwhile, Daehwa Securities was one of those outdated characters that came out at launch, whose heyday was long gone but still occasionally used as a joker pick in raids.
But seasoned players still use them, right? Those raid guides always say newbies don’t need to pull them, yet keep pulling out those old characters from the dusty corner of the storage—what absolute scumbags.
Anyway, if I want to achieve perfect, flawless first place in this little game of mine, even those outdated characters need to be fully upgraded to max level.
“Could Alpha Fund just come into Korea, start buying companies, and hire people left and right? No, right? But if it’s under the Daehwa Group name, some of it becomes possible. That’s the point.”
“...Ah.”
Besides, in this current “plan,” derivatives are only a side project attached to acquiring Yugong. Of course, it’s still ridiculously fun, and I’m very excited about it.
‘I need to make sure they keep a proper journal this time...’
There will be lots of illustrations and photos. My glorious journey should be remembered by everyone later.
That student council kid—what was his name, Go Yeon-woo or Go Yeon-moo—he’s supposed to be in charge of records. Hopefully, he’s got the talent to describe my greatness properly.
– Tap.
I looked at my reflection in the glass window, almost like looking into a mirror. I really liked the confident look on my face.
Sweeping my long hair, which fell to my waist, I smiled slightly.
“Call the others. We need to grow Daehwa Investment Bank now.”
If I can grow the derivatives market, why not grow a single company? If the company’s too small, we just make it bigger.
Because I have the ability to do so.
***
Originally, in my scenario, Daehwa Investment Bank was supposed to be both a subsidiary of Daehwa Securities and an independently operating company.
The plan was to build just the basic framework of the investment bank and fill it with personnel trained at Alpha Fund.
We earned more money than I expected, but there were fewer usable talents than I anticipated, so Alpha Fund ended up creating its own independent investment bank.
Still, I didn’t abandon Daehwa Investment Bank entirely. I managed to staff it with domestic talents reluctant to go to the U.S. and with people who had worked abroad too long and were now homesick.
– Tap.
I walked over to the other building to meet the newly assembled futures team.
“Good morning!”
A man bowed sharply at a 90-degree angle.
“Is it really you, Miss Ha-yeon? W-wow...”
Another looked up at me with eyes full of admiration.
“......”
And then there was one who seemed so nervous that water was practically dripping from his hands.
‘Hmm, being too popular is exhausting... but I guess that’s the price of being amazing.’
I waved lightly with a small smile.
“Yeah, hello everyone.”
“Ah, yes!”
“Great reactions. So, how is it? I look even better in person, right?”
With a grin, I hung my stiff coat on the coat rack and sat down.
– Thud.
“Alright, listen carefully. For at least the next three months, this team will focus primarily on crude oil futures. You know about the current oil prices, right?”
“Futures... does that mean... like, investing at the bottom because oil prices will go up later?”
“Ahaha, I can do that, but you can’t. And you’re wrong about the direction.”
Oil prices are going to drop further. Especially in the futures market.
“They’ll drop? From here? Uh... by how much?”
“Hmm...”
I tapped the desk with my ~Nоvеl𝕚ght~ index finger for a moment before answering.
“Probably into the negatives.”
At least until then, it has to drop.