A Wall Street Genius's Final Investment Playbook-Chapter 40

The conversation is flowing smoothly, just as I had steered it.

"Unicorn?"

"This guy's teasers hit an 80% accuracy rate every time! That’s why he earned the nickname. Not just once, but twice!"

Dobby emphasized the key points in an excited tone.

80% accuracy rate.

To anyone, that figure sounds absurd and seems easy to debunk.

At this point, Gerard should step in…

"80%? That’s hard to believe."

As expected, he took the bait.

I managed to suppress the smile creeping onto my lips.

"To be honest, it sounds like a con job."

And so, the con artist test officially began.

Gerard’s gaze locked onto me, clearly expecting me to defend myself.

But I had no intention of doing so.

Dobby was still the one answering Gerard's doubts.

"Exactly! The industry average is 10-30%, but 80%? That screams scam! When this guy first made such claims, everyone ignored him! But then! Someone decided to test him! A legendary MD at Goldman named Pierce—known as the ‘Lich King of Deals’ because he never loses a negotiation."

Dobby passionately unraveled the story.

Even to me, the subject of the tale, it sounded fascinating.

An arrogant rookie boasting an outrageous accuracy rate.

Word reaches a legendary MD, sparking a wager.

That alone would be intriguing enough, but the rivalry escalated when another legendary MD entered the fray.

Company politics came into play, and what began as a bet turned into a battle of titans.

Caught in the crossfire, every small fry at Goldman had to pick a side.

Most bet on the rookie losing.

It was logical—an 80% accuracy rate? Who would believe that?

Then, the twist happened.

"The companies he claimed were preparing for IPOs? They actually were! Three of them, in fact! It was confidential, but he predicted it."

"A coincidence."

"That’s what we thought too! But three out of ten? A 30% rate? That’s too high to dismiss as luck! Plus, these were companies no one thought were ready for IPOs. He chose only the most improbable cases!"

"Couldn’t he have known in advance?"

The heart of the con artist test lies in uncovering the trick.

In this sense, it’s like magic—once you figure out the mechanics behind the illusion, the spell is broken.

When the trick is exposed, all that’s left is the naked truth of a con artist.

Gerard’s first accusation was simple yet effective:

"Insider information."

In other words, he implied the rookie had prior access to the answers and pretended he had deduced them himself.

Hearing this, Dobby clapped his hands in agreement.

"Exactly! That’s what we suspected too! But then he predicted mergers and acquisitions!"

"That’s something an informant could also provide."

"Right! So we were convinced as well. But then, something insane happened! A company he recommended had their new drug approved by the FDA! And get this—it was a drug the company itself had given up on! They were preparing to sell the business, yet he called it!"

With that, Gerard’s first theory, "insider information," was debunked.

While Dobby continued his animated explanation, Gerard fell silent for a moment before launching his second line of attack.

"Isn’t this overly exaggerated?"

Gerard’s second accusation:

Using accomplices to plant false information.

Essentially, he suggested that the rookie was spreading fake leads through collaborators like Dobby.

"Exaggerated?!"

Dobby, suddenly labeled a liar, looked momentarily indignant but quickly regained his composure.

He turned to the other witnesses seated at the table.

"You all saw it, didn’t you? Ask them. Everyone at Goldman had a copy of the teaser and was cross-checking it as the results came in—like a game of bingo!"

As soon as the question was raised, everyone seated at the table nodded in agreement.

It was a moment where Gerard was once again at a loss for words. Just as his face began to tense subtly—

“What’s the principle behind it?”

This time, the question came from Rachel’s mother, Judy. Smiling warmly at Gerard, she continued,

“There are things in the world that are hard to believe, but instead of doubting everything outright, shouldn’t we confirm objective evidence first?”

A peculiar tension filled the air.

On the surface, it seemed like she was imparting wisdom to her son. But Gerard’s overly stiff reaction hinted at something more.

“How did you make such predictions?” Judy asked, this time directing her question at me.

Though her face was innocent, her demeanor was anything but. She was sharp, sifting through Dobby’s story for only the verifiable facts.

It was time for me to step onto the stage.

“I simply identified certain patterns. The biggest challenge in the biopharmaceutical industry is patent expiration. By analyzing timelines and predicting movements to create new revenue streams…”

I offered a plausible explanation of my algorithm, to which Judy responded with a smile,

“Amazing. Such an algorithm exists? Could it be applied to other industries?”

…That caught me off guard.

The idea of utilizing my algorithm outside its current scope hadn’t even crossed my mind.

“For instance, in the food industry?”

The mention of the food industry seemed to lend weight to the theory that Rachel’s maternal family was connected to Marquis, a confectionery company.

For a fleeting moment, I considered offering to create a customized algorithm for them.

But I quickly dismissed the thought.

For wealthy individuals, trustworthiness is paramount. Making empty promises would be reckless.

“This algorithm is designed specifically for the biopharmaceutical sector. It’s tailored to the unique characteristics of the industry and insights I gained from my medical background.”

“What I mean is, with enough time and effort, couldn’t patterns be identified in other fields as well?”

Judy’s innocent smile remained, but her gaze was razor-sharp.

“You’re not the only investor with a medical background, yet you’re the one who discovered this formula. That means the true differentiation lies in your ability to predict market participants’ psychology and actions, doesn’t it?”

She wasn’t wrong.

Her sharpness, contrasting with her gentle exterior, surprised me. Then she turned her attention to someone else.

“What do you think?”

The baton was suddenly passed to Gerard.

It became clear—Judy was testing him.

In the presence of someone claiming such implausible accuracy, she wanted to see what judgment her son would make.

Gerard responded quite maturely,

“It’s too soon to conclude that the algorithm is valid. A few cases aren’t enough to provide definitive proof. It’s better to wait until it has been thoroughly verified.”

“So, you’re going to wait?”

“I’m not simply waiting. While the algorithm is important, it’s equally crucial to observe the behavior of the person operating it. If someone touts an excessively high success rate to attract investors, it’s highly likely to be a Ponzi scheme.”

Gerard’s gaze shifted to me.

“Of course, Rachel’s colleague wouldn’t do such a thing. But if he were a con artist, he’d be aggressively recruiting investors.”

“Ah!”

Someone on the opposite end of the table suddenly exclaimed. It was Jim from the tech department.

“Sean is already gathering investors within Goldman! Promising to manage their funds for them!”

As Jim mentioned my unofficial fund, a triumphant expression appeared on Gerard’s face.

He believed he had finally uncovered my trick.

His third accusation was clear: Ponzi scheme.

The concept was straightforward:

Early investors receive high returns, enticing more investors to join.

New investors’ funds are then used to pay the earlier ones, creating a vicious cycle.

Eventually, it all collapses.

I calmly presented my rebuttal.

“I only intend to take on a small number of investors. Managing a large group while juggling other responsibilities would be impossible.”

A Ponzi scheme requires constant new inflows to sustain itself. Limiting the number of investors makes such a structure inherently impossible.

The moment Gerard's smile faded, I dangled the bait once more.

"I understand it's hard to believe. After all, my ‘words' don't matter. Just judge based on the results."

I emphasized results alone—a declaration of confidence.

A trick that worked twice; why wouldn't it work a third time? The more consistent the outcomes, the more everyone would start believing in the magic.

At this point, Gerard's likely next move was clear:

He’d need to join my unofficial fund. He’d want to see what I say to investors, what materials I distribute. Only by diving in could he uncover the trick.

In magic terms, this would be akin to stepping on stage and inspecting all the props.

How much would he invest…

Joining my fund would mean entrusting his money to me.

This test of mine could conveniently double as an opportunity to increase my seed money.

And he’s Rachel’s brother, no less.

A casual trial investment of a million dollars wouldn’t be too much to expect, right?

With those thoughts, I fixed my gaze on him. Finally, Gerard spoke.

"Interesting. Can I see the next investment picks?"

That wasn’t the answer I wanted.

He only wanted to see the picks—without investing.

A bold request, or perhaps a cautious one.

"The investment picks will only be disclosed to investors."

"I’ll pay generously for them."

"I'm sorry, but that goes against my policy."

Despite his offer to buy the information, I firmly drew the line.

If he wanted to uncover the trick, he’d have to invest directly.

Gerard’s suspicion became obvious.

"If the value lies in the information itself, why not just sell it? I don’t see why you need to manage the assets too."

That’s a thought every investor has at some point.

Why not just hand over the picks and let me handle the rest?

It’s a naive notion.

This seemed like the perfect moment to address it head-on.

"I'm saying this for the benefit of investors. Simply hearing the picks and investing based on that is extremely risky. That kind of approach is bound to fail."

"Why?"

"Every investment strategy has its own unique approach. The timing of entry and exit is determined by that strategy. If the target return is achieved or market conditions change, you need to exit swiftly. But it’s difficult for investors to judge this on their own."

"Then why not provide that information as well?"

"Even if I do, they won’t follow it."

"How can you be so sure?"

Because they never do.

Perhaps an example would make the point clearer.

"Let’s say I advise you to sell a stock immediately. The price is still rising, but I recommend exiting now. Could you sell without hesitation?"

"And if I can?"

"Good for you. But what if the stock price keeps climbing after you sell? Can you promise you won’t regret following my advice?"

"……"

Gerard didn’t answer right away.

Not even an empty assurance that he wouldn’t regret it.

"If you regret it even a little, it means you didn’t trust the information. Some might even think I misjudged the timing and refuse to sell in the first place. Others might sell and then buy back in, deviating from the original strategy."

"Doesn’t that just mean the strategy was flawed?"

It wasn’t Gerard who interjected this time—it was Jim from the tech department.

I barely knew the guy, yet he suddenly seemed determined to take me down.

"If the timing was off, isn’t that your fault?"

"No, the exit timing I chose was not wrong."

"But you said the price rose after selling. Isn’t selling at the peak the golden rule of investing?"

I couldn’t help but sigh. Ignoring him would make me seem defensive, as if I lacked confidence in my stance.

Fine. I’ll engage him properly.

"Who says you need to sell at the peak?"

"Isn’t that common sense? Buy low, sell high—that’s how you make a profit."

"Does that mean selling at the peak and buying at the bottom are the same thing?"

"It’s this kind of nonsense that makes you refuse to share the picks alone. Even with solid information, people twist it and jump to conclusions."

Buy low, sell high.

Buy at the bottom, sell at the peak.

These are not the same thing.

Yet novice investors conflate the two, scouring for the ‘bottom' and ‘peak' as if their lives depend on it.

But here’s the thing:

"No professional investor aims for bottom buying and peak selling."