Chapter 263: New York Miracle’s Strategy

New York Miracle was ticking along with average returns, nothing spectacular. This was partly due to Rachel Arieff, the director, whose management philosophy leaned towards zero losses rather than high-risk, high-return ventures.

“James, Howard, we prefer to stay away from derivatives as much as possible.”

“Why is that?” I asked with a chuckle, but her expression remained stern. “It’s not like there are many other places to invest on Wall Street right now, is there?”

Her grimace didn’t waver. “Do you know how many hedge funds are operating with high-stakes investors’ money right now? Ten years ago, there were around 500. Now, there are over ten thousand. And every last one of them is manipulating derivatives.”

She began to get worked up.

“Private equity funds are more respectable. At least they assess a company’s value, buy undervalued businesses, and then resell them. There’s a tangible entity there.”

“But derivatives offer higher returns,” Oh Se-hyun pointed out, sounding slightly frustrated. “We can’t completely ignore them just because of risk aversion, can we?”

Rachel shook her head firmly. “After twisting a derivative a couple of times, the only person who truly understands its nature is the one who created it. Everyone else is just a moth drawn to the flame of a potential payout.”

“Then how about Rachel creates her own derivatives?” I suggested. “Products where she knows the exact nature of the underlying assets.”

She seemed momentarily taken aback by the unexpected proposal but quickly shook her head.

“That’s not for Miracle. We’d need approval from ISDA (International Swaps and Derivatives Association) to create our own derivatives.”

Given Miracle’s size, getting that approval wouldn’t be difficult. But the fact that she was making excuses to avoid it showed she had no interest whatsoever.

“Our priority is protecting our clients’ money by investing in solid companies, blue-chip stocks, and reliable bonds.”

Oh Se-hyun opened his mouth to say something, but I squeezed his hand.

I believed she was making the right call. There was no need to take on all sorts of risks. Another powerful opportunity was just around the corner.

“Rachel, if you trust my judgment, how about this?”

“Tell me, Howard. I always trust your judgment.”

Her eyes sparkled with anticipation.

“Let’s steer clear of currency, interest rate, and stock derivatives. Instead, let’s focus on credit derivatives, specifically Collateralized Debt Obligations (CDOs).”

Rachel’s sparkling eyes instantly turned to ash.

Considering her top priority was safety, proposing the riskiest product was bound to elicit that reaction.

“Mortgage-backed securities are hot right now, but you also know that asset-backed securities are the riskiest, right?”

“Of course. My gut tells me we have a solid two years. I’m not confident beyond that, so let’s stick to a two-year window.”

She couldn’t very well go back on her word about trusting my judgment, so she reluctantly agreed.

“What kind of return are we talking about?”

“My projection is around a 38% return over two years. Factor that into Miracle’s overall returns and make your decision.”

Although hesitant, she brightened up when I gave her a concrete return projection and entrusted her with the investment amount.

“Okay, I’ll trust the Miracle Boy’s judgment once again. But I doubt you came all this way just to discuss something this minor? I check the investment reports every single day via email.”

“Our Miracle Boy here wants to dabble in art, and Rachel needs to lend a hand. Haha.”

“What? Art?”

Rachel looked a hundred times more shocked than when I suggested investing in derivatives.

* * *

“Why make things so complicated? Just buy the art. Howard, someone like you has more than enough clout to be a super collector. Just buy a mansion in New York and fill it with paintings. Why go through the trouble of acquiring a gallery?”

Rachel looked utterly bewildered as she listened to the art acquisition process.

“The people who own the art I want would never sell it directly to me. That’s why I need to use an intermediary… Find me a suitable one. Rachel, you know a lot of wealthy people, right? They’re bound to collect art. Surely, you can pull some strings and get me introduced to a decent-sized gallery.”

“Well, yes, but…”

She still looked unconvinced.

“Come on, don’t be so nosy, just lend me your connections. Who knows? The art Howard buys might skyrocket in value. Everything Howard touches turns to gold, right? Haha.”

Oh Se-hyun cut her off before she could ask any more questions.

“It’s been a while since we’ve gotten together. Let’s have a wild night out. Let’s drink until we drop.”

We were swept away by Oh Se-hyun into the dazzling nightlife of New York.

Oh Se-hyun, who had been downing expensive Claude Grapin Cognac like soju during dinner, started nodding off at the second bar we moved to.

“Alright, the retired old-timer is asleep. Shall we, the active players, have a real conversation?”

“The gallery?”

“No. That seems like a personal matter, so let’s drop it. I’ll find you the perfect gallery. What I want to talk about is…”

“CDOs (Collateralized Debt Obligations)?”

“Exactly. Wall Street is going insane right now. They’re mass-producing CDOs and Credit Default Swaps based on subprime mortgages. You said we have two solid years, but I’m not so sure…”

“Why do you think they’re so risky?”

“Subprime. It literally means ‘below prime.’ They’re packaging bad loans into products and giving them AAA ratings. It’s a scam.”

“A successful scam isn’t a scam. It only becomes a scam when it fails and gets exposed.”

“And you predict this won’t be exposed for two years?”

“Yes. A balloon doesn’t burst unless you poke it with a needle. To inflate it to the point of bursting, the US would have to keep blowing for two straight years.”

“The problem is, if that balloon bursts, the US economy will be a disaster.”

I looked directly at her, who was voicing her concerns, and asked, “So?”

“What?”

“Rachel, you’re a US citizen, but you’re also the CEO of our company. Shouldn’t you be more concerned about the company’s profitability than the US economy? Leave the US economy to the Treasury Department.”

“They’re all in on it!”

“If you’re that worried about the US, resign as CEO of Miracle right now and jump into politics. I’ll provide unlimited campaign funds. If you’re not going to do that, focus solely on the company’s profits.”

My cold tone seemed to startle her.

“S-sorry. That was unprofessional of me. You’re right. I’m a New York citizen, not a Washington one.”

“If you can’t stop the tide, ride it. Money and justice are parallel lines that never meet.”

“Okay. But how can you be so sure about the two-year timeframe?”

It was actually three years, but I said two just in case. Since I couldn’t tell her the truth, giving her a question to ponder was the easiest way out.

“Do the math. It’ll come out to two or three years.”

“Do the math…?”

“Did you think I consulted a crystal ball?”

I lifted my glass of whiskey, the ice now melted.

Perhaps it made me look like some mystical Asian.

* * *

“Elizabeth Porter. Friends call me Bette. It’s a pleasure to meet you, Mr. Jin.”

“Please, call me Howard.”

“Will I?”

She was a striking beauty with dark skin, tightly curled hair, and a statuesque figure, suggesting she had some African heritage.

“Howard, Bette is a bright spark. She majored in history at Yale and art history at NYU. Now she’s the director of the Wentworth Art Gallery,”

Rachel gave her a subtle nod of approval.

“Director, but not doing a very good job of it. We’re on the verge of closing down,”

She said with a wry smile.

“How much debt are you in?” I asked.

“… ?”

“I mean, how much do you need to stay afloat?”

“Ah, around $1.2 million would give us some breathing room.”

“What’s your annual budget?”

“$2.5 million. But we do have income from our exhibition programs…”

I raised my hand to stop her.

“I’ll provide $3 million in funding every year. Just focus on making it a great gallery. Okay?”

“… !”

Bette Porter’s mouth hung open, her eyes blinking in disbelief.

“What did I tell you? Today’s your lucky day! Ho ho,”

Rachel laughed heartily, nudging the stunned Bette Porter.

“Wait a minute. What’s going on here?”

Snapping out of her daze, she frantically rummaged through her bag and pulled out a stack of files.

“Here’s the current state of our gallery. Shouldn’t we review this first?”

I took the files she offered and tossed them onto the empty seat next to me.

“Is it necessary?”

“Do you know anything about our gallery or me?”

“No, not at all. In fact, I’m practically clueless about art.”

“Am I the only one who finds it strange that you’re offering $3 million in annual funding without even looking at our records?”

“Are you saying you’ll refuse a favor that comes with no strings attached?”

“There’s no such thing as a free lunch.”

She wasn’t some airheaded art enthusiast detached from reality. She understood the basics of business.

It was clear that the gallery run by such a woman was struggling due to its scale, not its management. Then again, what art institution wasn’t facing financial difficulties?

“Who said it was free? My promise is only valid if you bring me what I want.”

I handed her a piece of paper with a long list of artwork.

“Take a look.”

Bette Porter snatched the list and eagerly scanned it.

Her face flushed crimson, finally erupting in an exclamation.

“Holy Shit! WOW!”

“Is it that impressive?”

“Are you serious? Mark Rothko, Paul Cézanne, Jan van Eyck, Titian… and even Damien Hirst. This is humanity’s legacy!”

“Do you know what these artworks have in common?”

“I told you, they’re masterpieces.”

She was still buzzing with excitement, so much so that she didn’t even notice the name ‘Soonyang Gallery’ clearly printed at the bottom of the list.

“Acquire all of them. Of course, I won’t sell them all, but try to buy as many as possible. That’s my condition.”

This seemed to be a massive shock to her. After all, acquiring all those pieces would easily cost several hundred million dollars.

“Ah, I’ll cover the cost of acquiring those artworks in full, so you don’t have to worry about the money.”

“M-more than that, who owns these pieces…?”

She looked back at the paper, her eyes widening.

“Soonyang Gallery! These pieces are all in the Soonyang Gallery.”

“Yes.”

Disappointment washed over Bette Porter’s face as she confirmed the name.

“Forget it. Once a piece goes into that gallery, it’s notorious for never seeing the light of day again. They’re locked away in storage forever.”

Her disappointment morphed into anger.

“It’s a notorious gallery that never displays its masterpieces. Even if it’s not a permanent exhibition, they should at least display them once a year. Hiding away artwork and just storing it goes against the very purpose of a gallery.”

“They may not exhibit them, but they will sell them. Though not all of them.”

“What do you mean? Soonyang Gallery isn’t a dealer.”

“Trust me and go through with it. You have nothing to lose, right?”

She was still clearly confused by the unbelievable things that had transpired during our short meeting.

But Bette Porter had just grasped the opportunity of a lifetime.

Opportunities like this don’t announce themselves; they appear suddenly. You don’t have much time to decide whether to seize them or not.

Because opportunity is a merciless creature that waits for only a fleeting moment.