Landon leaned forward in his seat, unable to hide his confusion.
"Did you just say we should sell all of our Cisco shares?"
Receiving a puzzled look, Seok-won nodded calmly, his expression composed.
"Yes. Selling them all at once would shake the market, so divide the sales and complete them before March."
"But Cisco's been hitting record highs every day. Don't you think we'll regret it later if we sell now?"
While Landon tried to change his mind, Seok-won remained firm and unwavering.
"It's already peaked. This is the time to cash out and move on."
"...!"
Landon furrowed his brow. He could tell this wasn't a rash, spur-of-the-moment decision—there was something he didn't know. Seok-won noticed his look and began to explain in an even tone.
"You're aware that Cisco's been engaging in vendor financing deals with major clients since last year, right?"
"Of course."
Vendor financing refers to a practice in which a manufacturer directly lent or provided financial support to customers purchasing its products.
Cisco, a company that sold internet infrastructure equipment, had been sustaining its explosive revenue growth by offering direct funding—through equity investments, leases, or loans—to clients who lacked sufficient capital to buy its products.
"It sounds impressive on paper, but in reality, Cisco's cash flows out to its clients and then comes back as recorded revenue. The money just circulates internally, inflating profits artificially."
"You're right that it can exaggerate revenue," Landon admitted, "but many of these dot-com companies—our clients—aren't profitable yet. They have no other way to fund their purchases. And besides, if their businesses succeed, Cisco will earn interest on those loans, and the equity stakes we've taken could generate major returns once those companies grow."
He looked at Seok-won, trying once again to persuade him.
"More importantly, this strategy helps expand Cisco's ecosystem. The more companies that use our equipment, the more they'll depend on us in the long run. That's a long-term advantage."
But Seok-won shook his head slowly, scepticism written across his face.
"That would be true—if things turned out as ideally as Cisco's executives hope."
"Do you see it differently, boss?"
Sitting with one leg crossed, Seok-won raised his index finger slightly.
"For Cisco's vendor financing strategy to succeed, there's one essential condition."
"And what's that?"
"The customers buying their products need to show that—even if they're running losses now—they have steadily growing revenues and a clear path to profitability."
"...."
"But as you know, Landon," Seok-won continued, "unfortunately, most of these so-called dot-com companies aren't making profits at all. In fact, they're bleeding money every quarter."
Seok-won spoke in a calm, steady voice.
"Up until now, people have been blinded by the rosy promise of a new and revolutionary era called the Internet. They've been investing blindly, ignoring financial statements, and driving stock prices to absurd heights. But no party lasts forever."
Realizing the weight of what he was saying, Landon swallowed hard and asked quietly,
"You think that time has come now?"
Seok-won nodded heavily.
"Until recently, the market's overflowing liquidity combined with the dot-com frenzy to push stock prices higher and higher. But since last year, the Federal Reserve has begun tightening and withdrawing money from the market—that's going to become a major headwind."
Landon immediately countered.
"But even though the Fed raised rates three times in a row to 5.5%, the market didn't even flinch. In fact, it climbed even more steeply after the end of the year."
"Yes," Seok-won agreed. "But that was nothing more than an illusion—caused by the Fed temporarily pausing rate hikes and pumping liquidity back into the system to address the Y2K issue."
To prevent chaos from the Y2K bug, governments and corporations around the world had spent hundreds of billions of dollars.
And when the Fed injected massive liquidity into banks to prevent financial paralysis, the money that had been drained from the market by rate hikes suddenly flooded back in.
It wasn't intentional, Seok-won thought, but the Fed ended up inflating the bubble even further at the very end.
Just looking at how the surge in market liquidity perfectly matched the rising stock index charts, the correlation was obvious.
"As most analysts expect," Seok-won continued, "when the Fed resumes rate hikes and tightens liquidity again, starting with the FOMC meeting in February, market sentiment will shift sharply."
"Hmm… true. It's going to be difficult for dot-com stocks to soar to new highs like they did over the past few years," Landon admitted.
Yet, even then, he hadn't truly grasped the possibility of a bubble collapse. Seok-won couldn't help but wear a faintly bitter expression.
It showed just how optimistic everyone in the market still was about the future of dot-com companies.
No wonder, he thought, people don't even blink when a company that can't make a few million dollars is valued at over ten billion.
The pessimists who once warned of a bubble had vanished, drowned out by the so-called "New Economy" logic that prioritized growth over profit and blinded investors to reality.
Investors who bought early made huge profits, and those struck by FOMO are now rushing in at the last minute—fueling this final rally alongside the Fed's excess liquidity.
Thinking about the nightmare that the latecomer investors—those who had jumped aboard out of FOMO—would soon face when the bubble burst, Seok-won felt a heaviness settle in his chest.
But by now, the market was already overflowing with madness and greed. There was nothing he could do to stop it.
After listening to Seok-won's reasoning, Landon finally began to understand the situation, though a trace of regret lingered on his face.
"Since we've already made more than enough profit, selling before those negative factors start surfacing doesn't seem like a bad idea," he said.
"We're not just selling Cisco," Seok-won replied. "We're going to liquidate all our holdings in dot-com companies—Yahoo, Microsoft, Intel, Oracle, all of them."
"What?"
Landon's eyes widened in disbelief.
"You're saying we should sell everything?"
"That's right. If the leading stock of the dot-com boom—Cisco—collapses, do you really think the others will remain unscathed?"
"You're not wrong, sir, but still…"
Landon trailed off, unable to finish his sentence.
The Eldorado Fund held enormous positions in those companies. Selling all of them at once felt like an overreaction—perhaps even paranoia.
Then, as a thought suddenly flashed through his mind, Landon jerked his head up, his face turning serious.
"Wait… don't tell me you actually believe, like some of those pessimists, that the bubble is going to burst?"
Seok-won nodded quietly, watching Landon, who had leaned forward as if he might spring out of his chair.
"When an economy soaked in liquidity starts drying up under the Fed's tightening policies," Seok-won said, "the true nature of these dot-com companies—hidden beneath all the hype—will finally be exposed."
"Then…"
Meeting Landon's stiff, pale face with an unflinching gaze, Seok-won continued.
"When that time comes, no matter how bright their future prospects might seem, people will realize that these companies—valued at hundreds of billions of dollars—barely make even ten percent of that in revenue. And when investors recognize that, what do you think they'll do?"
Landon's face drained of color. He murmured, almost to himself,
"They'll feel that something's wrong… and they'll want to sell—to lock in their profits before it's too late."
"Exactly."
Leaning back against the soft leather sofa, Seok-won rested his elbow on the armrest and spoke quietly.
"But at first, people won't be able to sell their stocks so easily."
Landon frowned slightly, then seemed to understand what he meant.
"You mean, even though they'll be anxious, they'll hesitate to sell—afraid that if they do, prices might rise again afterward?"
"Exactly. The market's been climbing steeply for years now, so selling will be even harder. Some investors might even see a slight dip as a buying opportunity and add more to their positions."
Landon nodded faintly in agreement.
"And if, in that situation—where liquidity's drying up and investor confidence is already fragile—a small incident or piece of bad news suddenly sparks fear, what do you think will happen?"
Landon groaned softly and pressed a hand to his forehead.
"The moment a few people start dumping their stocks, panic will spread rapidly, leading to a full-blown sell-off."
Seok-won responded in the same calm, detached tone.
"Once sentiment collapses like that, the market will plunge. Leveraged positions will be liquidated one after another, dragging the index down even further in a death spiral."
It was the kind of scenario that could send chills down the spine of anyone involved in the stock market.
Landon, his face half-blank with shock, steadied himself and asked in a trembling voice, looking at the still composed Seok-won,
"So you're truly convinced the bubble will burst."
Seok-won lifted his teacup, took a slow sip, and set it back down before answering.
"Everything that goes up eventually comes down. And since the market's risen so sharply over the past few years, the fall will naturally be painful."
Landon tried to object, his tone almost pleading.
"Even if there's some turbulence, the Internet revolution isn't just an illusion. Isn't it possible that the bubble won't burst—that the market might have a soft landing instead?"
Seok-won fixed him with a cold, clear gaze and said pointedly—
"Do you really think Cisco and Oracle can maintain P/E ratios of 200 and 160 even after the bubble bursts?"
The price-to-earnings ratio (P/E) measured how many times a company's stock price exceeded its earnings per share. A P/E of 200 simply meant the company's valuation was inflated two hundredfold compared to its actual profits.
Of course, if a company's net income grew dramatically, its P/E would drop accordingly.
But even with their promising growth potential, most dot-com companies had yet to establish a solid source of profit—making that scenario unlikely.
Landon knew this all too well. His face darkened, and after a long silence, he finally spoke.
"If things play out the way you say… it's terrifying just to imagine."
Seok-won lifted his teacup again, taking a sip before responding.
"It'll be a nightmare for the stock market, yes. But if we can foresee the crash, it's also a tremendous opportunity."
"!"
Landon's eyes widened as realization struck him.
"You're planning to short the market, aren't you?"
At his excited tone, Seok-won gave a faint, knowing smile.
"As I said earlier, the sharper the rise, the steeper the fall. Which means the potential profit from a short position will be enormous."
Realizing the grand strategy Seok-won was outlining, Landon's face lit up, all traces of gloom vanishing.
"If we time the Big Short just right, we could hit another massive jackpot—exactly as you said!"
"After the Fed resumes rate hikes at the February FOMC meeting, the bubble will burst—perhaps as early as March, or by midyear at the latest. So before the FOMC meeting, liquidate every stock we hold except the ones I list for you, and prepare to take short positions."
"Understood. How large should our short position be?"
"Use as much leverage as you can. Bet big."
His answer came without hesitation—a clear reflection of his absolute conviction that the bubble would collapse.
Despite the dread of the impending market crash, Landon felt his heart pounding with excitement. Once again, he was about to be part of a monumental bet—one that could go down in Wall Street history.
TL/n -
FOMO stands for "Fear Of Missing Out."
Investors often buy shares because everyone else is buying, not because they understand the company or its value. This is especially common during market rallies, trending stocks, or viral "meme stocks."
Example:
A stock jumps 50% in a week. Social media, news, and friends talk about huge gains. You buy in impulsively because you fear missing out on potential profit, even if the stock is overpriced.
Real-World Examples:
Dot-com bubble (late 1990s): People bought tech shares because everyone was investing in the internet craze. Meme stocks (2021): GameStop and AMC surged as retail investors jumped in due to FOMO, not fundamentals.
+++
During the peak of the dot-com bubble in March 2000, Cisco Systems (CSCO) reached a historic high of $80.06 per share, making it the most valuable company in the S&P 500 at that time.
However, the subsequent burst of the bubble led to a dramatic decline in Cisco's stock price. By October 2002, the share price had plummeted to approximately $8.06, marking a staggering 90% drop from its peak