Chapter Sixteen

“It’s not like some bet in Vegas,” I warned my brother on our twenty-fifth birthday. “You’re talking about a huge gamble, with a whole lot of the money we’ve inherited.”

“It’s not a gamble,” Jude insisted. “I know what I’m doing. More importantly, the regents know precisely what they’re doing.”

I’d looked around the deck of the cruise ship that Jude had rented out for our birthday celebration. It was comical. Jude had rented an entire cruise ship for three days—the whole thing, every berth—to celebrate in style. He’d invited hundreds of our “closest friends” for the party. I knew, at most, twenty or so of them.

Standup comics and top-tier rock bands were performing. There was a world-premiere launch of a new Hollywood film. He’d even managed to convince the cast and crew of the most popular reality television show in America to film an episode aboard the ship during the party. Jude had spared no expense.

“By the way,” I said to him, as we viewed the festivities from the captain’s quarters high above the ship’s deck, “was this absolutely necessary?”

“Go big or go home,” Jude said with that megawatt smile of his that was rapidly becoming a trademark. “It’s all illusion, brother of mine. Just a big show.”

“And you’re the center of attention.”

Jude shrugged. “Someone has to be. Might as well be me. It could be you as well, if you’d ever loosen up and enjoy what we have.”

There was no need to answer him. Jude knew where I stood. We’d had this argument so many times that neither of us even brought it up much anymore. Jude wasn’t about to change the way he grabbed the world by the throat, and I wasn’t about to change my own habits anytime soon either.

“So this bet?”

“Not a bet,” Jude said. “I’ve been studying it for six months now. My advisors assure me that it’s all headed in this direction.”

“You mean your regents,” I corrected him.

“Whatever.”

“Speaking of which …”

“They’re around. You know, one of these days, you’ll stop asking that question.”

“All right, all right,” I grumbled. “So your advisors tell you that this thing makes sense. Why?”

“Because they know what’s happening at the nation-state level. The new Japanese prime minister is serious about finally devaluing the yen. He desperately needs to boost their exports to shore up their economy.”

“You’re talking about that principalities and powers stuff?”

“Yeah, that,” Jude said casually. “They’re never wrong about those things. When they say a world leader or a government is going to do something, go a certain direction, it happens. And, in this case, it means that the yen is going to be devalued. We’re going to gamble on that, bet against the yen.”

There was a sudden burst of activity below. Glancing down at the deck, I watched as deckhands started to clear the center of the ship and bring in barrels and boxes. “Something else you’ve cooked up?”

“Fireworks—to celebrate our own independence day four years ago,” Jude said.

“Like they’re gonna get that.”

“Like I care. The fireworks are for me—and you. Our own private joke.”

“Great,” I mumbled. “So, seriously, Jude, tell me—how do you know this will happen with the yen? Japan’s leaders have been trying to devalue the yen for twenty years without any success. People have tried to short Japan for most of that time. I think they call it a ‘widow maker’ on Wall Street. What makes this time any different?”

Jude turned away from the festivities below to face me, as if he wanted to make certain that I understood. “Because this time I’m asking the question and demanding the right answer. I studied the situation with Japan’s leadership and national intentions and asked the regents to tell me what would happen. I’m satisfied with the answer. It’s that simple.”

Weirdly, I believed him. When it came to Jude, he’d never failed to get what he’d wanted or sought. Not really. This was a much bigger lift, with more at stake. But, in the end, it did seem to be that simple. Jude was asking the question, and he was almost certain to get the answer he wanted.

“I get it.” I nodded. “So how much are you putting in play?”

“A good part of the $15 billion in the hedge fund,” Jude said. “I figure we’ll make almost $2 billion if the yen falls the way I know it will.”

“What do you need to make that bet?”

“The dollar buys about eighty yen right now,” he explained. “I need it to buy more than one hundred yen to the dollar over time. If it does, we’ll make $2 billion on paper.”

“And if the yen doesn’t fall? If it goes the other way?”

“Then we’d lose that much,” he said in a straightforward tone. “But trust me, it won’t.”

“And are you, or we, telling anyone about this gamble? Not that I care one way or another. Just curious.”

Jude remained calm, unruffled. “No, we’re not. This is merely a test, mostly on my part. I want to see how some of these reverse-knockout options work. I don’t need this to be public—not this time.”

 

Six months later, almost to the day, The Wall Street Journal reported that Germany and France intended to take legal action against Japanese government for its successful efforts to devalue its own currency, boosting its trade and exports.

Other countries—those as dependent on exports as Japan—quickly announced that they would join the efforts of Germany and France and take action to reduce their own currencies in order to remain competitive with Japan.

There was a flurry of activity at every level on the world economy. Investors and hedge funds changed their ratios on the yen. Financial analysts predicted that Japan’s six-month antideflation efforts would rapidly come to an end.

The dollar brought in 105 yen on that day, up from eighty yen six months earlier. Jude, on the advice of his regents, pulled back all of the efforts to short Japan on that day. But not before we’d made nearly $2 billion in six months, just as Jude had predicted.