A Wall Street Genius’s Final Investment Playbook Chapter 2

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What does Goldman Sachs do?

Most people think Goldman is a securities company.

They believe it issues securities and deals in stocks.

That’s wrong.

Goldman is not a securities company but an investnt bank.

Simply put, it’s a bank for corporations and investors.

So, what does a bank for corporations and investors do?

It’s hard to explain in a few sentences, especially since our clients don’t deposit money with us, unlike retail banks.

Anyway.

When I first joined, I didn’t know what Goldman did.

Even after a 10-week internship, I still didn’t know.

In fact, I didn’t even understand after working there for six months.

How could I not know?

Because I wasn’t a person, I was a slave.

Imagine a galley ship for a mont.

An ancient ship powered by humans rowing it.

I was no different from a slave locked beneath the deck, rowing.

Slaves have no way of knowing where the ship is headed, what it’s transporting, or what the captain and crew are doing.

They just silently row, locked in a dark space, day and night.

So, what does rowing an in this context?

It ans churning out Excel sheets.

Every investnt bank has Excel slaves, and they churn out nurous Excel sheets from 8 a.m. to 4 a.m. every day.

The clients glance at those Excel sheets for about 5 seconds before tossing them into the trash, but that’s okay.

There are always more slaves ready to produce new Excel sheets.

I was chosen as one of those Excel slaves and took my first step on Wall Street.

The official title was "analyst."

But right from the start, I encountered an obstacle.

‘Do I need to get selected within two years to survive?’

Every analyst is on a two-year contract.

When the contract expires, only a few slaves get promoted to associate and make it above deck.

Of course, being above deck doesn’t an it’s safe.

From then on, it’s a brutal fight for performance, with knives drawn.

It’s a survival world where the bottom 10% get ruthlessly cut.

Only those who survive this extre battle can get promoted to VP (Vice President), MD (Managing Director), or, very rarely, an executive.

In such an environnt, surviving as an Asian isn’t easy.

Is it racism?

No, it’s racial bias.

Whenever they saw black hair, they asked similar questions.

“Quant? IT?”

To Aricans, Asians are engineers, mathematicians, scientists, or computer nerds.

Good with numbers, but lacking grit, leadership, and innate adventurousness.

As a result, black-haired people don’t get assigned to important projects.

They’re too timid and only follow instructions.

Without opportunities to perform, there’s no opportunity for promotion.

That’s why there are plenty of black-haired newcors but no black-haired executives.

This is called the “bamboo ceiling.”

At first, I didn’t know the ceiling existed.

So, I kept my head down, diligently and sincerely churning out Excel sheets, showcasing my hard work… But after about six months, I started to feel uneasy.

‘If I keep going like this, I’m dood.’

White people were the only ones positioned beside the ladder to move above deck.

I was stuck in the corner.

So, I quickly decided to change course.

I decided to turn my black hair from a handicap into a selling point.

And just then, I found a suitable field.

The biotech and pharmaceutical industry occupies a unique position in the market.

Because it deals with human life, there are many governnt regulations.

The leadership qualities that only white people supposedly have?

They don’t matter here; specialized knowledge is the most important thing.

Especially dical knowledge.

And when it cos to doctors, it’s all about Asians!

Coincidentally, I also had a dical degree.

‘This is it!’

From then on, instead of rowing, I started rubbing my hands together, making my case.

“I graduated from dical school.”

“In my country, becoming a doctor is the greatest form of filial piety.”

“Did you know that Koreans have long been known as the ‘white-clad people’?”

Thanks to playing up the bias against Asians, my dical background, and even invoking my ancestors, I managed to get assigned to a dical-related project, and I finally escaped being an Excel slave and made it above deck.

But… once I got up there, it was a completely different world.

“These guys were just grunts too.”

It turned out that investnt banks were nothing more than interdiaries who bowed to their clients.

The real rulers at the top of Wall Street were the hedge funds.

They wielded vast sums of money and had the absolute power to strike at both corporations and even nations.

If you’re going to board a ship, shouldn’t it be a big and fast one?

“I’m transferring.”

I took imdiate action and highlighted my expertise as a black-haired dical enthusiast, transferring to one of the top 20 hedge funds.

However, the world of hedge funds was an even more brutal survival ga than Goldman.

“That guy’s from d school, and the other one has a PhD in molecular biology. Both are handling the biotech and pharmaceutical sectors.”

“?”

“Prove your worth within six months.”

The competition began the mont I was hired.

The fund manager narrowed his eyes and gave a warning look.

“We need to maximize ‘efficiency’ with ‘diversified investnts.’ You get what I’m saying, right?”

Hedge funds pursue extre efficiency.

That ans they don’t hire two employees with similar abilities.

To survive, you need to have your own strategy, sothing we call an edge.

I had to prove my unique edge within six months.

But that… wasn’t an easy task.

Do you know much about biotech stocks?

To simplify it to an extre: a certain company develops a new drug that treats a specific disease and requests FDA approval to sell it.

If approval is granted?

The drug hits the market, and a big success follows.

If not?

The drug is scrapped, and all the money invested goes down the drain.

That’s anywhere from hundreds of millions to trillions of won.

It’s all or nothing.

The epito of high-risk, high-reward.

That’s why big pharmaceutical companies are reluctant to jump into early-stage developnt.

If they make a wrong move, it shows up on their financial statents, and their stock price drops.

So, who takes on the developnt?

Small biotech companies that have nothing to lose.

There are more drugs out there with registered patents that haven’t reached the market than you’d think.

These small companies either secure patents for those drugs or develop the drugs themselves and test them on patients.

This is what we call a clinical trial.

Clinical trials are expensive.

The average cost is $2 billion, or about 2.6 trillion won.

For cancer treatnts, the cost doubles, requiring about 5 trillion won.

But small biotech companies don’t have that kind of money.

So, every ti they conduct a clinical trial, they announce the results widely to attract investors.

This is when the real gambling starts.

Phase 1 trials (20-80 patients).

The betting begins.

Since there’s not much data yet, people usually just take note at this stage.

Phase 2 trials (100-300 patients).

As data accumulates, the betting picks up speed.

Around this ti, pharmaceutical companies start picking a few promising candidates and make deals.

They buy sales rights in advance, co-invest, or even buy out the entire company.

Phase 3 trials (hundreds to thousands of patients).

The stakes snowball.

Hedge funds and institutional investors also place bets, speculating on the likelihood that the small biotech company will be acquired.

At this point, money pours in from all directions, and everyone swallows hard, waiting for the final outco.

Will the FDA give its approval?

But no one can predict the result.

Not even doctors.

The human body is so complex that no one knows what kind of side effects a tiny chemical might cause.

Until now, my edge had been my dical background.

With dical knowledge, I could make judgnts like, “This side effect is life-threatening, so the evaluation will be stricter.”

But that only worked at places like Goldman.

They were just interdiaries.

A good result?

That’s great, but if it doesn’t happen, no big deal.

Even if the outco is bad, they can still collect their fees.

But hedge funds were different.

They were players betting on the results.

They had to predict the outco by any ans necessary.

“How can I secure a competitive edge…?”

Days of racking my brain followed.

Then one day.

I fell asleep while working overti and woke up to a dark room.

Amid the towering stacks of docunts, I saw a file glowing green.

“Am I deficient in vitamins?”

I wondered if I was hallucinating, so I splashed so water on my face and returned.

But the two files were still glowing green.

So I decided to read them.

,

Both were drugs in Phase 3 clinical trials.

At Phase 3, the drug’s efficacy is pretty much proven.

But any drug can have side effects.

The key question is whether the FDA deems them acceptable.

“I’m not sure about this one.”

The first docunt was about a treatnt for arterial hypertension.

It was a drug that utilized a hormone called prostacyclin, but there were no similar products using this pathway, so I had no point of reference.

“This one seems tricky.”

The second docunt was about a drug that neutralizes the side effects of anesthesia.

It had already been rejected three tis, but the clinical trial design had been revised, and they had resubmitted the paperwork.

There was nothing remarkable about it, so I set it aside.

But a few weeks later.

Both of the green-lit files had passed through the eye of the needle.

It was… a miracle.

Of course, it could have been a coincidence, but at the ti, I was desperate.

I needed a miracle, not a random coincidence.

“Let’s try again.”

I gathered more materials and turned off the lights again at night, but the green glow I was searching for didn’t appear.

But that didn’t an I could give up.

“If it were easy, it wouldn’t be a miracle!”

Every night, I piled up various docunts and checked them.

Whew.

It didn’t take long before I found the green light I had been longing for, and another miracle appeared soon after.

This was no coincidence.

There had to be a pattern.

After comparing and analyzing the two cases and conducting nurous tests, I was able to uncover the mysterious rule behind these miracles.

“It’s the Pareto Principle.”

Also known as the 80:20 rule.

The theory that the world is not equal, and 80% of results are driven by a distinguished 20%.

In sports, 20% of MVPs score 80% of the goals.

In the stock market, 20% of companies generate 80% of the wealth.

So, those green files ant this:

I could filter out the top 20% of Phase 3 clinical drugs that had submitted their applications to the FDA.

I had no idea I had such an ability.

“Well, it would be stranger if I knew.”

It’s a rather oddly specific ability, isn’t it?

It was as if my ancestors, feeling sorry for , had lowered a spoon tied to a lifeline.

It was strange, but… I decided to just eat.

You don’t question miracles.

It didn’t matter if it couldn’t be scientifically explained or logically understood.

As long as the miracle continued.

Fortunately, the miracles did continue.

From then on, I soared.

Not only did I beat out my two rivals, but I was also promoted to portfolio manager at lightning speed.

“Ha Si-heon, you made 2.7 billion again with just one move?”

“A PM at that age? Not even two years in?”

“They’ve increased his assets again. I heard it’s 3 trillion won…”

My portfolio neared 3 trillion won in Korean currency.

Since I took 20% of the profits, I could rake in tens to hundreds of billions of won with each bet.

Everyone envied .

So resorted to petty acts.

“We’re the FBI. We’ve received a tip that you, Mr. Ha Si-heon, are involved in insider trading…”

“Do you think it’s possible to make this much money every ti?”

After that, I had to occasionally bet on losing horses to adjust my win rate.

But it didn’t make much difference in my earnings.

The top 20% that I selected always hit the mark.

Here’s the most important part:

“I’m not taking any risk!”

What if, by chance, I failed?

To put it bluntly, that’s not my problem.

The 3 trillion won in the portfolio isn’t my money; it’s the investors’ money.

Even if I lose it all, I’m not obligated to compensate for their losses.

When I make money, it’s mine, but if I lose it, it’s not my problem.

Isn’t this the stable life I’ve always dread of?

But… it was around this ti that I started visiting psychiatrists.

I suddenly began experiencing strange symptoms.

“Every ti I withdraw money, my heart beats irregularly. Yesterday, I bought a new car, but it felt like I’d lost an organ.”

I couldn’t spend money.

Every ti I did, I felt a pathological anxiety.

When my asset graph dropped, so did my body temperature, and whenever I handed over cash, my hands and feet turned ice cold, like a corpse’s.

“Why?”

I already had hundreds of billions of won.

More than enough to spend lavishly without ever running out.

So why did I feel so anxious every ti I spent money?

“You need to find what you truly want. Listen to your inner voice.”

The specialist was completely wrong.

This wasn’t so emptiness that successful people often feel.

You think I’d get bored if I bet and won every day?

That’s sour grapes from losers.

There’s no ti to get bored when fresh dopamine is being supplied constantly.

I was genuinely happy and enjoying each day.

Wall Street felt more like ho to than my actual ho.

Even if I had to live again, I’d live the sa way.

When I said that, the specialist gave a strained smile.

“As I ntioned, the answer is sothing you have to find for yourself.”

I cut ties with that specialist and went to see another one.

But they all said the sa thing.

“No one can give you the answer. You have to figure it out yourself.”

I toured all the renowned psychiatrists in New York, but I could never pinpoint the cause of my bizarre anxiety.

Then, one day.

“What the hell is this?”

A small lump appeared on the side of my neck.