Chapter Summaries

Zhao Chen arranged for Chen Xi to act as Henglong’s chairman while he focused on Era Vanguard in New York, setting limits and oversight for the appointment. He also asked the company to continue monitoring consumer-stock risks through its established research and decision-making systems.

• Zhao Chen proposed a six-month acting-chairman appointment for Chen Xi, subject to Board assessments every three months and Board review of major matters.
• Chen Xi accepted the appointment and committed to preserving Henglong’s research, investment-review, and compliance procedures.
• Zhao Chen reviewed warning signs in Henglong’s consumer holdings and told Chen Xi to keep tracking them, with the Investment Decision Committee empowered to act if core variables changed.
• Shen Jue continued independent oversight, including reviewing compliance confirmations and seeking a pause and Board reconsideration for decisions that crossed institutional boundaries.
• Xu Yong agreed that Chen Xi’s delegated day-to-day authority required clear limits and proper oversight.

Zhao Chen finalized Henglong’s leadership and handover arrangements before leaving for New York, naming Chen Xi acting chairman and setting a departure date for next Monday. After the meeting, the executives prepared to carry on Henglong’s work under its existing governance structure.

• Zhao Chen instructed Liu Mingyu to announce his temporary overseas absence and Chen Xi’s six-month acting chairmanship while emphasizing that Henglong’s governance and oversight systems would remain unchanged.
• Zhao Chen assigned Shen Zhiyi to handle cross-border legal coordination in New York and Su Wantang to develop the charity foundation’s North American partnerships, requiring both to finish their domestic handovers within a week.
• Zhang Qingxue agreed to verify Shen Zhiyi’s and Su Wantang’s handover lists and submit them to Shen Jue for approval before they left their posts.
• Zhao Chen assigned Henglong’s duties among Chen Xi, Shen Jue, Zhang Qingxue, Chen Qiming, Song Zhongping, Chen Wei, and Liu Mingyu, and said the group would leave the following Monday.
• Chen Xi thanked the executives for their support and told Shen Jue she would send her delegated-authority list for review before releasing the announcement.
• Zhao Chen recommended that the Research Institute independently assess Henglong’s A-share holdings and that the Investment Decision Committee make decisions based on data without waiting for him.

Zhao Chen met with Lin Shicheng in New York to review Era Vanguard’s GME position and the rising retail interest surrounding Ryan Cohen and DFV. He ordered the firm to keep building slowly and authorized Shen Zhiyi and Lin Shicheng to manage the trades and adjust the options’ maturities.

• Lin Shicheng reported that Era Vanguard held about 1.2 percent of GME’s outstanding shares and out-of-the-money call options, and explained why the firm was accumulating shares slowly.
• Lin Shicheng told Zhao Chen that Ryan Cohen had publicly acquired a large GME stake and that DFV’s WSB posts were drawing a growing number of retail investors.
• Lin Shicheng identified a possible Citron bearish report as a catalyst that could provoke retail buying and pressure heavily shorted GME shares.
• Zhao Chen ordered Lin Shicheng to maintain the current buying pace, keep common stock holdings below five percent, and keep call-option strikes between fifteen and twenty-five dollars.
• Shen Zhiyi recommended rolling the options into longer-dated contracts before GME’s Q3 report, and Zhao Chen approved her plan and gave her and Lin Shicheng authority over GME trading.

Zhao Chen and Lin Shicheng assessed the scarcity of London Metal Exchange-compliant nickel plates and planned an eighteen-month effort to acquire 200,000 tonnes. Zhao approved a measured first phase, while the chapter ended with him comparing Era Vanguard’s GME position with Ryan Cohen’s and DFV’s.

• Lin Shicheng explained the London Metal Exchange’s nickel delivery standards and estimated that only 100,000 to 150,000 tonnes of qualifying nickel plates were freely traded annually.
• Lin Shicheng reported that registered warehouses held at most around 40,000 tonnes of nickel plates, with most of their nickel inventory consisting of briquettes.
• Lin Shicheng proposed building a 200,000-tonne position over eighteen months, using offshore SPVs, producer contracts, and nearby storage, for an estimated $2.4 billion to $3 billion.
• Zhao Chen approved monthly purchases of 5,000 to 8,000 tonnes, directed Lin Shicheng to negotiate directly with Jinchuan and Norilsk, and requested a separate storage and certification budget.
• Zhao Chen reviewed Era Vanguard’s GME common-stock position and compared its one-percent stake, acquired at an average of six dollars, with Ryan Cohen’s $8.43 average and DFV’s five-dollar average.

On September 15, Zhao Chen visited SpaceX’s Boca Chica base at Elon Musk’s invitation and saw the progress of the Starship SN8 prototype and a video of the vacuum Raptor engine’s full-duration test. Musk began explaining what the engine’s 330-bar chamber pressure meant in engineering terms, leaving Zhao Chen listening for the details.

• Elon Musk invited Zhao Chen to Boca Chica to see the Starship work and the newly tested vacuum Raptor.
• Zhao Chen, Su Wantang, and Shen Zhiyi flew from New York to Brownsville and drove to the Boca Chica base.
• Musk showed Zhao Chen the SN8 ring sections and described plans for a three-engine static fire and high-altitude test flight.
• Musk played footage of the vacuum Raptor’s fifteen-second test and described its nozzle and record-setting chamber pressure and thrust.
• Zhao Chen asked what 330-bar chamber pressure meant in engineering terms, and Musk began to explain.

Zhao Chen visited Elon Musk at Boca Chica, where Musk explained how reliable 330-bar Raptor performance and repeated testing could make Starship reusable. The chapter ended with Zhao memorizing the date of SN8’s planned three-engine static fire while continuing to conceal Era Vanguard’s GME and AMC trades.

• Elon Musk explained that maintaining 330-bar chamber pressure and reusing Raptors were essential to lowering Starship’s launch costs.
• Musk told Zhao Chen that SN8’s first three-engine static fire was planned for October, with a flight to sixty thousand feet before the end of the year if the test succeeded.
• Zhao Chen concealed Era Vanguard’s GME and AMC positions when Musk asked about the fund’s US stock activity.
• Musk circled October 20 on the test schedule and promised to send Zhao a video of the static fire.
• Musk described his vision of Starship reaching Mars, and Zhao memorized the October 20 test date alongside his investment timelines.

Zhao Chen asked Elon Musk about Starship’s test-flight prospects and the obstacles to reaching Mars. Musk outlined a plan to send cargo missions first, establish a Martian base, and eventually transport a million people, while Su Wantang stressed that sustaining them would require more than rockets.

• Zhao Chen asked Musk how likely SN8 was to succeed, and Musk said he expected it to reach high altitude, perform a belly flop, and reignite, but not land.
• Musk explained that successive Starship prototypes would build on one another until the landing maneuvers worked.
• Musk identified orbital refueling and the timing of Mars transfer windows as major hurdles, and described plans for uncrewed cargo missions to establish fuel production on Mars before crewed missions.
• Musk said the first crewed travelers might be permanent residents, with large-scale settlement beginning in the 2030s and a long-term target of one million people.
• Su Wantang warned that a million people on Mars would need air, water, food, healthcare, education, and law, and Musk said building Mars would require fields beyond aerospace.
• Musk suggested that people reached through Su Wantang’s foundation’s energy education programs might help build Mars’s first power station, and Zhao Chen stood and walked to the whiteboard.

Zhao Chen proposed turning Starlink into a deep-space laser relay network linking Earth and Mars, completing the communications component of Musk’s Mars colonization vision. Musk was impressed and invited Zhao Chen to visit the SN8 launchpad after its flight succeeded.

• Zhao Chen pointed out that the Deep Space Network could not support communications for a large Mars settlement and suggested using Starlink’s laser links to relay signals between planets.
• Musk embraced the idea, describing Starlink, Starship, and Optimus as communications, transportation, and labor systems essential to Mars colonization.
• Zhao Chen expanded the plan with relay nodes in Earth orbit, Mars orbit, and the L4/L5 points, outlining how signals could travel between Earth and Mars.
• Musk questioned how relay satellites would be powered and aligned, and Zhao Chen proposed nuclear power sources and pointed to Starlink’s existing laser-link capabilities.
• Zhao Chen described how the network could enable telemedicine, remote education, and engineering support between Mars and Earth.
• Musk told Zhao Chen he would take him to the SN8 launchpad on his next visit if SN8’s flight succeeded.

Zhao Chen took Su Wantang and Shen Zhiyi to a Las Vegas casino and explained how Edward Thorp used probability to beat blackjack and later applied his methods to finance. The chapter ended with Zhao Chen continuing to assess the cards and choose when not to bet.

• Zhao Chen arrived in Las Vegas with Su Wantang and Shen Zhiyi after flying from Boca Chica.
• Zhao Chen took Su Wantang and Shen Zhiyi to the MGM casino’s high-limit area after dinner.
• Zhao Chen won a blackjack hand, then explained Edward Thorp’s card-counting system and how it gave players a statistical edge.
• Zhao Chen described how Thorp later used probability and the Kelly Criterion to build a successful hedge fund.
• Zhao Chen counted the cards in a new hand, calculated a negative count, and chose not to bet.

Zhao Chen explained the Kelly Criterion and how Edward Thorp used probability to gain an edge at blackjack and on Wall Street, while teaching Su Wantang and Shen Zhiyi at a Las Vegas casino. After Shen Zhiyi won her first casino hand, Zhao Chen compared his work at Era Vanguard to Thorp’s and began describing how academics came to dominate Wall Street’s most profitable funds.

• Zhao Chen explained the Kelly Criterion and Thorp’s strategy of adjusting bets to expected value and risk.
• Zhao Chen lost and won several blackjack hands, then gave Su Wantang and Shen Zhiyi chips to try the game.
• Su Wantang lost her hand, while Shen Zhiyi followed Zhao Chen’s advice, won, and stopped playing.
• Zhao Chen led Su Wantang and Shen Zhiyi out of the casino and told them that Era Vanguard operated on the same principles as Thorp’s strategy.
• Zhao Chen said investors could beat the market by understanding value better than it did, then began discussing how physicists and mathematicians built highly profitable Wall Street funds.

Zhao Chen explained how mathematicians, physicists, and computer scientists brought modeling and statistical methods to financial markets, connecting their work to his own investment approach at Era Vanguard. Su Wantang and Shen Zhiyi understood that his casino visit had been a lesson in finding positive expected value, and the group prepared to leave for Antelope Canyon.

• Zhao Chen described James Simons, Emanuel Derman, Fischer Black, and David Shaw and how they applied mathematics, physics, and computer science to finance.
• Zhao Chen said their shared method was to model markets, find probabilistic mispricing, and use position sizing and compounding to earn returns.
• Zhao Chen explained that he applies his legal training to break companies such as Nvidia, Tesla, and GME into verifiable investment variables.
• Su Wantang realized Zhao Chen had used their casino visit to explain his investment methodology, while Shen Zhiyi reflected on the careers of the quant pioneers.
• Shen Zhiyi asked about Zhao Chen's transition from Zhengfa University, and he explained how legal analysis shaped his approach to investing.
• Zhao Chen and Su Wantang packed up their tea things and prepared to drive to Antelope Canyon the next day.

On September 22, Zhao Chen planned Era Vanguard’s expansion of its GameStop position while keeping the fund’s identity concealed. The team aimed to finish accumulating by October 20 and anticipated January as a potential catalyst tied to Ryan Cohen joining the board.

• Shen Zhiyi gave Zhao Chen the September 21 position statement, showing Era Vanguard held about 840,000 GME shares and options equivalent to roughly 560,000 shares.
• Zhao Chen set a target of 4.99% total exposure, requiring approximately 2.08 million more shares’ worth of exposure without revealing Era Vanguard’s identity.
• Lin Shicheng estimated the team could buy no more than 90,000 to 150,000 shares per day to avoid pushing up the price, so Zhao Chen set an October 20 deadline.
• Zhao Chen directed the team to buy about 2.1 million common shares below an average price of $13 and keep total options premiums within $20 million.
• Lin Shicheng proposed adding January and June 2021 call options, explaining that concentrated open interest could prompt market makers to buy shares as they hedged.
• Zhao Chen identified January 11, when Ryan Cohen was expected to join GameStop’s board, as a possible catalyst after the position-building period.

Zhao Chen, Shen Zhiyi, and Lin Shicheng planned how Times Pioneer Capital would build a discreet 4.99 percent position in GME before its expected Q3 report. Zhao expected Citron to use the report as a catalyst for short selling, and the chapter ended with the position still being built as GME’s short interest exceeded 100 percent.

• Shen Zhiyi reviewed Lin Shicheng’s plan to divide GME common stock among offshore SPVs and options among separate commodity accounts.
• Zhao Chen set limits for daily stock purchases and staggered options purchases to avoid attracting market attention.
• Zhao Chen predicted Citron would wait for GME’s Q3 report before short selling and ordered the common-stock position completed by October 20 and the options position by mid-November.
• Lin Shicheng warned that rising options delta could push total exposure above five percent, so Zhao Chen ordered purchases stopped at 4.9 percent and excess exposure sold if necessary.
• Shen Zhiyi added automatic exposure monitoring to the legal procedures, while Zhao told Su Wantang that Citron’s Andrew Left would use GME’s Q3 losses as negative news.
• Zhao looked over Manhattan and noted that GME traded near $11.88, short interest exceeded 100 percent, and Ryan Cohen held 9.98 percent.

Zhao Chen explained to Su Wantang and Shen Zhiyi why GME’s extreme short interest could trigger a squeeze despite the company’s weak fundamentals, and why he kept buying at twelve dollars. He said he would exit based on surging public attention rather than a target price, and Shen Zhiyi added sentiment indicators to the exposure-monitoring procedure.

• Su Wantang and Shen Zhiyi questioned whether buying GME after its rise from six dollars to nearly twelve still offered positive expected value.
• Zhao Chen explained how short interest above the available share supply created a lending loop that could force short sellers to buy shares if rising losses exhausted their margin.
• Shen Zhiyi asked what would happen to retail investors who bought at inflated prices, and Zhao Chen acknowledged that some would be left holding shares after the squeeze.
• Zhao Chen said he would exit when GME discussion spread to mainstream media and became widespread, rather than trying to sell at the peak.
• Zhao Chen argued that short sellers had exceeded the limits of their position, and Shen Zhiyi added forum activity and mainstream coverage as triggers for an exit review.

After Microsoft announced a strategic partnership with GameStop, GME surged, accelerating Era Vanguard’s position-building plan. Zhao Chen kept the firm’s exposure below its 4.99 percent ceiling and ordered the team to finish building its stock and options positions on schedule.

• Lin Shicheng showed Zhao Chen news of GameStop’s multiyear partnership with Microsoft, and GME climbed sharply after the market opened.
• Era Vanguard bought 78,000 GME shares at an average price of $17.20, bringing its common-stock holdings to about 1.9 million shares and total exposure to 4.31 percent.
• Lin Shicheng reported that Ryan Cohen had posted a chart of GME’s rising share price, while online discussion of the stock intensified.
• Lin Shicheng told Zhao Chen that short interest remained above 90 percent of GME’s circulating supply and that borrowing fees continued to rise.
• Zhao Chen ordered Lin Shicheng to maintain the planned buying pace, complete the common-stock position before Wednesday, and finish the options purchases the following week.
• Shen Zhiyi reported that exposure monitoring had run normally, and Zhao Chen instructed her to sell shares if exposure exceeded 4.95 percent after any close.

Zhao Chen’s team completed its GME position-building while keeping exposure below the preset ceiling, then began an observation period. By October 19, they had trimmed shares to stay within the buffer and were waiting for GME’s Q3 report and Citron’s next move.

• On October 12, Zhao Chen approved the purchase of 80,000 GME shares, while Lin Shicheng monitored rising options exposure and bought the shares before the price surged further.
• On October 13 and 14, Lin Shicheng bought June-expiry call options as GME climbed, bringing total exposure to 4.86 percent and ending the position-building phase.
• Shen Zhiyi confirmed the exposure monitoring process had operated normally and that the draft 13G filing remained unsubmitted; Zhao Chen ordered the team to continue monitoring during the observation period.
• As GME rose through October 15 and 16, its options Delta pushed total exposure to the 4.95 percent buffer ceiling, so Zhao Chen ordered a share sale for the following Monday.
• On October 19, Lin Shicheng sold 30,000 GME shares through an offshore SPV, reducing total exposure to 4.91 percent.
• Zhao Chen noted that Citron had not acted and the Q3 report was still pending, leaving the team waiting for the report and Citron’s move.

After GME’s dismal Q3 report sent its share price tumbling, Zhao Chen watched Era Vanguard’s losses mount while its exposure remained below the threshold for action. He chose to wait for Citron’s bearish report as traders debated whether Keith Gill had abandoned his position.

• GME reported falling revenue and comparable-store sales, announced a plan to sell up to $100 million in stock, and gave no forward guidance beyond expecting a better fourth quarter.
• GME plunged in after-hours trading, and Shen Zhiyi told Zhao Chen that the reduced exposure required no adjustments under the buffer zone mechanism.
• GME continued falling over the next two days, leaving Era Vanguard with roughly $27 million in unrealized losses; Zhao Chen told Lin Shicheng to wait for Citron’s bearish report.
• GME traded near $11 as discussion of the stock surged on WSB, where Keith Gill had not posted since December 4.
• Zhao Chen read a WSB thread speculating that Keith Gill had either secretly added to his position or sold out.

As GME sank to new lows and short interest climbed above ninety-five percent, Zhao Chen kept Era Vanguard’s position unchanged while waiting for Citron. DFV’s livestream rallied retail investors, but Zhao Chen believed the decisive moment would come when Citron released its bearish report.

• Zhao Chen told his team not to sell GME shares or options and to wait for Citron.
• When GME fell to $10.20, Lin Shicheng showed Zhao Chen DFV’s post and livestream, in which DFV revealed his losses and vowed not to sell.
• DFV argued that heavily shorted GME could surge if retail buying forced short sellers to cover, and urged viewers to hold their shares.
• After the livestream, Shen Zhiyi reported that WSB sentiment had improved while Era Vanguard’s exposure remained steady at around 4.1 percent.
• Zhao Chen said Citron was waiting for retail enthusiasm to fade and ordered exposure monitoring to continue, saying GME’s real move would begin when Citron tweeted.

Citron published a bearish GameStop report, driving the stock down to eight dollars and splitting retail investors as short sellers celebrated. Zhao Chen concluded that the report had intensified the short squeeze risk and declared that Era Vanguard was ready to act.

• Andrew Left published Citron's report, arguing that GameStop was structurally declining and setting a price target of twenty dollars, or five if its turnaround failed.
• Retail investors reposted the report, and GME plunged from its premarket price to eight dollars as panic spread across WSB.
• DFV posted proof that he had not sold any shares, but many replies questioned how much longer investors could hold.
• Shen Zhiyi reported Era Vanguard's shrinking GME exposure and large unrealized losses, while noting that no action was yet required under its buffer-band mechanism.
• Zhao Chen argued that Left had overlooked the risk of extremely high short interest and that short sellers would keep adding positions near eight dollars.
• Zhao Chen told Lin Shicheng and Shen Zhiyi that it was time for Era Vanguard to act.

Zhao Chen ordered Era Vanguard to buy GME aggressively and use the 13G filing deadline to build its holdings above 5%, despite Lin Shicheng and Su Wantang warning that the move would make the firm a target for Wall Street short sellers. He argued that extreme short interest and wavering retail confidence had pushed short sellers toward a dangerous position, then turned to Lin Shicheng as he prepared to explain further.

• Zhao Chen ordered Era Vanguard to buy GME common stock and options, raising its target exposure from about 3.7% to eight to ten percent.
• Lin Shicheng calculated that Era Vanguard could cross the 5% threshold around December 23 and file its 13G on January 4, 2021, after continuing to buy.
• Lin Shicheng warned that aggressive buying could deepen unrealized losses and provoke short-selling firms, increasing Era Vanguard's future compliance costs and market friction.
• Su Wantang agreed that openly betting against short sellers would change Era Vanguard's position from defending itself to starting a war with Wall Street institutions.
• Zhao Chen cited GME's short interest above 95%, the holdings of DFV and Ryan Cohen, and retail investors' wavering confidence as reasons the short sellers faced danger if the price rose.
• Zhao Chen argued that Citron's report had pushed short sellers toward a cliff and said a rise to $12 could trigger cascading margin calls.