Part 13 - Ten-thousand fold profit in six years- the legend of Taiwan stock market

The illustration above is the foreign exchange rate (DEM, FRF, GBP, JPY vs USD) in 1981-1990. 

Apparently the highest exchange rate of Japanese yen had appreciated to 79.5 yen against one dollar. It was more than four times against USD from 1973 to 1995, and caused great depression in Japan’s economy.

This illustration of foreign exchange rate is my first treasure map, which I found it through Plaza Accord (hereafter refer to PA) and its meaning impacted global market. “A short article worth thousands billion US dollars" (https://philwu5389.wordpress.com/2015/08/11/ten-thousand-fold-profit-in-six-years-9/ ) was talking about this event. However, it was a pity that United Daily News only gave a small place to this big global event due to Taiwan Martial law- the political effect I called. So, only celebrities like Wan-lin Tsai was able to know the fact behind the story. How much money worth of this news report? It is uncountable! It gave birth to Taiwan’s Fubon Financial Holding Co., and defrosted many “frozen shares" while average daily stock volume was only about ten to hundreds shares in those year. CDFH(2883)’s capital boomed to tens billion from original few hundreds million, price from 20 NT dollars to 1,000 NT dollars. Cathay Life Insurance boomed from 50 NT dollars to 2,000 NT dollars, capital also from few hundreds million to tens billion. Wan-lin Tsai became the richest man in Taiwan, because he saw the business opportunity of PA. This opportunity also ended up Taiwan’s Martial law. After lifting foreign exchange control, TWSE (Taiwan stock) boomed to 12,682 points.

Above all, I am going to talk about: “How to find the treasure?" In the end of May 1989, just few days before June Fourth Incident, TWSE was very active and boomed to 10,000 points. This number was much higher than the one I had been laughed. During that time although index had already risen 10 times and more, people was alive again. The restaurants were full house everyday; a go-for of the security earned about seventy to eighty thousand per month. If a securities specialist not earned at least five hundred thousand per month, he would consider an unprofitable one. Lately, I received a call from one of my department professors, he asked my interest to work for a “big" legal person as the financial planning personnel. “big"? How “big" was it? I wondered. But my second thought was that if someone dared to give me ten hundred million for investing? Who cares? America stock seemed to be stagnation. It might be a chance for me better than doing nothing in America.

I was shocked when I first walked into this “legal person" ! It was a really “big" company which I trembled to enter it. However, I finally exercised my specialty to reply the company’s representative when he was asking me about investing in Taiwan shares. My answer surprised both of us: “TWSE seems to be booming to high, it is not a good time to purchase them."Was I crazy?! I flew hundred miles back to Taipei and said “No". Why wasn’t I told them on the phone? I was really a freak. My sense told me to say “No", however I really wanted to work in this big company. So I said even more curiously,
“Although TWSE is rising rapidly, other countries still have much potential." Gosh! I was nervous about my words, for I had never had any experience with international stock market. But only some mutual funds. Nonetheless, this company held many stocks that since they were founded. And so, none of them involved in TWSE before, not even “international stock market" which made them be caught unprepared.

Lately, when I was about to present a plan of global stock market investing, I suddenly found 2/3 of examiners were oversea PhD and the big men of Taiwan. Some of them were often reported on the newspaper. I was fussy to step up for my presentation. Why was that so serious? I wondered. Twenty big men had against a young man like me (I was the youngest at the meeting). After, I felt they spoke to me with kind words and agreed with my opinion. But, my teacher unexpectedly said “most of them seemed to hold opposite point of view from you." I astonished about his reply that I couldn’t get what people actually mean in my age of thirty. I finally understood the way how big men talked. It suddenly reminded me a trick called “needles in cotton", which was from a kunfu novels I used to read when I was little. I thought that was it.

Anyhow, I thought it was because of my teacher’s influence. They had bit the bull and given me some money: about two hundred million. Although this number was different from what was expected, ten hundred million. But it was better than nothing.
And above all, I was a real broker, especially a global financial broker.

To be continued….