Daehwa Securities, President’s Office.
I sat back in a plush chair, reading through a report about Yukong.
“Mm, looks like Uncle handled things well.”
“...I’m sorry.”
Seo Ji-yeon was kneeling in front of me, offering a formal ‘apology.’
The reason was incompetence. She should have stepped in to restrain Yoo Jin-ha midway or at least shown that she was taking the lead to some extent, but instead, she had let him run wild without interference.
Of course, since the results were good, it ended with just this much.
“Hmm? No, it happens. Hey, keep massaging my legs.”
“Yes...”
This was Seo Ji-yeon’s first major failure. Well, it was major from her perspective, not mine.
So I was pretending to comfort her, keeping her nearby so she wouldn’t lose confidence. There’s no cure for a wounded heart, after all.
“Why do you think you failed this time?”
Seo Ji-yeon had been acquiring multiple companies through BS Investment.
And the only failure among them was Seon-gyeon Group. In my opinion, /N_o_v_e_l_i_g_h_t/ that failure had probably left her rather timid.
So when Yoo Jin-ha acted aggressively, she had probably just nodded along, focusing on learning rather than intervening.
“I-It’s because I wasn’t determined enough! Even if he’s your uncle, Miss, my only master is you...”
Her resolute expression as she gave the pre-prepared answer was kind of cute.
“Honestly, that’s not it, is it? Even if you openly pushed back, if Uncle argued, you would’ve been dragged into his pace.”
“...”
The outcome was obvious. Seo Ji-yeon was used to either receiving or giving orders one-sidedly; she had almost no experience dealing with equals in political maneuvering or mental sparring.
The closest thing would have been dealing with Lee Si-hyun, and even then, Si-hyun had been the one accommodating her.
—Rustle.
“Well, it’s fine. That’s not important right now. Just do better next time, next time.”
“...Yes.”
She had probably learned a lot from this incident.
With that thought, I shifted my focus elsewhere.
[The Rapidly Growing ETF Market... S&P 500-Tracking ETFs and Dow Jones Index ETFs Gaining Popularity]
[The ETF Market Surpasses $300 Billion, Explosive Growth in Five Years]
[Daehwa Securities Announces KOSPI-Tracking Index Fund Doubled in Size Within a Year Despite Gloomy Social Atmosphere, Bull Market Continues]
ETF, index funds... these things had already existed long before.
ETF had appeared quite a bit later, but even index funds had been around since before I was born.
So creating a ‘boom’ here wasn’t all that difficult. These products already had solid potential from the start.
“Come to think of it, didn’t Korean pension funds switch to index-tracking funds recently?”
“Ah, yes! The National Pension Fund invested in the KOSPI this time. I worked hard to make sure they put it in Daehwa Securities. Hehe.”
Rustle, rustle.
“Well done, I’ll praise you for that. If conservative pension funds recognize it, individual investors will start investing soon as well.”
“T-Thank you...”
Still hurt from being scolded earlier, Seo Ji-yeon nodded, looking a little teary-eyed. This was why praise should always come after the scolding.
The way I expanded the crude oil futures market had been simple.
Just by consistently introducing new methods, the market grew on its own.
***
Meanwhile, in a towering building on Wall Street—
Julian Robertson, chairman of Tiger Fund, frowned.
“...Alpha Fund switched its main focus back to index funds?”
“Yes, CEO Erin Collins said it himself not long ago. There are even rumors that a few people from Vanguard have moved over to Alpha Fund, and Bogle himself supposedly confirmed it, so it seems solid.”
“That makes sense... it must be an important period for Alpha Fund.”
Something similar had happened before.
Right before the East Asian financial crisis, Alpha Fund had still shown high returns, but unlike its previous frenzy, it had taken a more rational and risk-averse approach.
Alpha Fund had poured enormous amounts of money into index funds and ETFs.
Normally, index funds were bought for hedging; making them a primary strategy was rare. Aside from John Bogle, famous as a champion of index funds, almost no one did that.
The general consensus was that index funds, which tracked stock indices, were safe but had significantly lower returns. ETFs, essentially turning those into securities, were thought to be much the same.
So, back then, people sneered at Alpha Fund, saying its “ferocity” had dulled.
At least that’s what economic journals and financial experts thought at the time. And they weren’t entirely wrong—just misinterpreting a predator pausing to watch its prey.
“Tsk, the name ‘Tiger Fund’ is crying. Less bold than some East Asian girl not even twenty years old...”
“W-Well, that’s not exactly a fair comparison, is it?”
“Hmph. How can you grow if you’re always looking backward? A beast hunts prey bigger than itself.”
Tiger Fund was supposed to be the world’s second-largest hedge fund after Quantum Fund... but Alpha Fund’s overwhelming dominance had pushed it down to third.
Still, second place wasn’t impossible.
Recently, Quantum Fund’s George Soros had declared he was abandoning derivatives trading, shifting to a more stable fund strategy. And with LTCM’s spectacular collapse and forced absorption into Alpha Fund, second place seemed within reach.
Tiger Fund had also made massive profits by shorting during the dotcom bubble collapse. Its returns couldn’t match Alpha Fund’s insane numbers, but projections still estimated over 40% annual returns this year.
But Chairman Robertson remained dissatisfied.
‘Alpha Fund... now they’re choosing to play it safe after eating their fill, huh?’
It was really more like they were slowing down to digest their enormous gains, but it still left a bad taste.
Watching a rival thrive always stung, and it hurt even more when, despite Tiger Fund’s expected 40%, maybe even 50% legendary return this year, it wasn’t getting much acclaim.
By 2001, Tiger Fund was projected to manage $30 billion, while Alpha Fund had already soared past $100 billion.
“Index funds, index funds...”
He pondered for a moment.
No formal studies had confirmed it yet, but as one of Wall Street’s top fund managers, he knew Vanguard’s strategy, though simple and often ridiculed, consistently outperformed most star fund managers over the long term.
The “simple, astonishing secret to making money” that investors craved was, ironically, index funds.
Robertson disliked investing in them because he wasn’t “some mediocre” fund manager; he was a legendary one.
His average annual returns had been nearly 33% for eighteen years. In under twenty years, Tiger Fund had multiplied its principal by over a hundred times, so 15% annual returns felt laughable.
“Do you plan to invest in index funds, sir?”
So he shook his head.
“No. Avoiding risk in this market is for cowards. But... not all index funds are bad. Some based on other indices might be interesting.”
“Other indices...?”
On Wall Street, if you knew one thing, you could spin ten more ideas. Robertson could already see the future.
“When index funds get big, copycats will flood the market. Just imagine—inverse ETFs that profit when stock prices fall, or leveraged ETFs. ETFs are just index funds turned into securities, aren’t they? Regulations might be uncertain, but if ETFs have passed, those products will sell too.”
“Ah, come to think of it, I heard about a new ETF based on WTI crude recently. And some based on gold and wheat.”
“...Gold ETFs? Why not just buy gold directly? Oil, sure, since it’s harder to trade physically.”
“Which is why they’re small in scale. Since Alpha Fund is trying it, they’re just slapping things together at this point.”
“Right. I still think ETFs are a long way off. Not until dotcom companies grow enough and the true internet era arrives.”
Without advanced computers, ETFs were impossible. Turning index funds into securities wasn’t as easy as it sounded.
And waiting for an uncertain future was uncomfortable for a sixty-year-old investor. Robertson stroked his chin, thinking.
‘Shale gas looks promising these days...’
Tiger Fund’s motto, true to its name, was wild, aggressive investing.
Even if Tiger Fund disappeared and Robertson retired someday, his philosophy and successors would remain a foundation of Wall Street. His conviction was unshakable.
Bogle might have said, “Don’t invest in commodities or inverses with index funds,” but...
Robertson had no intention of listening to someone with lower returns than himself.
“My guess is crude oil futures prices will rise. They’ll drop for a while, but eventually they’ll climb again. Let’s target that moment.”
It was a rational decision.
The only question was timing...
But Robertson, who had timed his shorts perfectly during the dotcom bubble to make billions, brimmed with confidence.