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Chapter 144: Striking It Rich!
🕑 Added 2025-05-04 19:39:07 +0000 UTCThe Nasdaq’s been tanking hard. By April, a court ruled they had proof Microsoft was monopolizing—yep, they might even split the company up. Investors were sweating bullets when that hit the front pages of every major financial paper!
After the internet bubble’s wild ride, the panic about tech stocks finally kicked in. Even Goldman Sachs’ top analyst, Cohen, who hadn’t said boo about tech in a decade, told everyone to dump their shares. Oof.
The Nasdaq vibe flipped overnight. Analysts who’d been hyping it up suddenly turned bearish, and the crisis started rearing its ugly head. Investors, funds, and brokerages went nuts—selling off everything in a total frenzy!
The bubble burst, and the crash was on. Except for a few big dogs like IBM, Oracle, and Amazon holding steady, most tech stocks tanked by 50% or more. Yahoo’s down to $130 a share, Apple’s slid from $40 in March to $20, and Microsoft, Cisco, AOL… nobody’s escaping this mess!
This whole bubble crisis is gonna drag on until September 2002, wiping out $5 trillion from the Nasdaq. Right now, it’s just phase one of this bear market disaster—no one’s dodging this bullet. Even Scott Swift’s old crew at Merrill Lynch, one of the slickest firms out there with their fancy fund-hedging tricks, still took a $150 billion hit!
Good thing it’s just stock value evaporating, not cash flow—otherwise, Merrill Lynch wouldn’t even make it to the subprime mess before going belly-up.
But one guy saw a lifeline in this stormy stock market chaos: Dunn Walker. Oh yeah, he’s cashing in big time! 💸
- Shorting Yahoo: 10.86 million shares, borrowed at $3,674, repaid at $1,312. That’s $62 profit per share—total haul? $2.565 billion.
- Cisco: 7.2 billion total shares, shorted 1.2 billion with a 5% margin. Borrowed at $743, repaid at $446—$297 per share, raking in $3.564 billion.
- Apple: 400 million total shares, shorted 8 million. Borrowed at $394, repaid at $216—$178 per share, netting $1.4 billion.
Plus, he snagged $2.7 billion from Microsoft, $3.2 billion from AOL Time Warner, and $730 million from Dell. The only hiccup? Shorting Amazon. The leverage was too high, his stake too small, and he got forced out when the stock was still climbing—lost $35 million there. Oops!
All in all, in this first crash phase, Dunn pulled nearly $6.9 billion from the futures market! After capital gains tax (6.9 - 20% - 15%), he’s sitting on $5.58 billion. Cha-ching!
Dunn’s stoked, but there’s a twinge of regret. No wonder everyone talks about Yahoo and Cisco when the dot-com crash comes up—these two were the real goldmines. Cisco’s got 7.2 billion shares and a $550 billion market cap. If he’d shorted 5% of that? We’re talking $8 billion! But his trader, Scott Swift, being the pro he is, wouldn’t risk putting all the eggs in one basket without a crystal ball. Fair enough—still cut Dunn’s profits down a bit.
Dunn’s not sweating it, though. The bubble crisis isn’t over—this is just the first wave. Phase two’s coming: 9/11. He’s got time to stack enough cash to swoop in and buy Universal Pictures when Vivendi’s bleeding out and desperate to sell. So far, he’s on track. No biggie!
April 15th—tax day—rolled around. Dunn got burned by an accounting firm before and only figured it out after chatting with Sherry Hershler. Turns out, the top companies and richest folks all have their own financial teams. Outsourcing to tax firms? They play it too safe, dodging gray areas, and it jacks up your bill big time.
Since his box office cut hasn’t hit yet, Dunn only paid $7 million in personal income tax. But Dunn Films shelled out over $77 million in corporate tax. Then he cleared $35 million of Marvel’s debt, paid off a $1.5 billion loan for Titanic... and still injected $1 billion into Dunn Films, handed Scott Swift a fat $30 million bonus, and kept $4.25 billion in his pocket. Not too shabby!
Now, what to do with all that dough? Dunn hit up his financial team, led by Blanca Reyes—MIT finance grad, Harvard law master’s, hooked up by Brian Lord. Her salary? A cool $6 million a year. (For reference, Dunn Films’ prez, Bill Mechanic, makes $5 million—though back at Fox, bonuses bumped him to $10-15 million. No chance of that here yet!)
Blanca’s worth every penny, though. Case in point: she negotiated with Lucasfilm so Titanic’s box office cut goes through capital gains tax instead of personal income tax. That alone saved Dunn over $30 million!
“Last year, Buffett paid $17.36 million in personal income tax,” Blanca said, smirking at Dunn. “Wanna know how he pulled that off?”
Dunn grimaced. “Just tell me what I need to do.”
“Set up a trust fund,” she said. “It’s how all the big shots dodge taxes.”
“How’s that work?”
“You know how it goes—rich folks pay taxes on heavy assets like houses, art, private jets, gold, luxury goods, yachts, you name it. If their cash flow dries up, those taxes alone can bankrupt them. Take Greystone Mansion in Beverly Hills—couldn’t pay property tax, so the state took it and turned it into a tourist spot.”
Dunn nodded. Nic Cage popped into his head—his manager talked him into buying tons of art and properties, then he couldn’t pay the taxes and ended up in a string of garbage movies.
“A trust fund fixes that?” Dunn raised an eyebrow, catching on.
Blanca grinned. “Yup. Personal taxes? No wiggle room. Corporate taxes? Tons of ways to delay. Put those assets under a foundation instead of your name, and even if your funds tank, you’ve got a buffer.”
Dunn’s eyes lit up. “Smart!”
She kept going, making sure he got it. “It’d be your private fund, so even if you’ve got zero assets in your name, you’d still control everything through the foundation. No impact on your lifestyle.”
Dunn nodded, gears turning. “Ohh, I get it. Personal tax evasion’s a nightmare—the feds are always squeezing rich folks, and one slip-up means tax fraud charges. But companies? The government throws out all kinds of policies to help them grow.”
“Exactly!” Blanca beamed. “That’s the second perk—trust funds snag policy breaks individuals can’t touch. Personal tax rates are rigid, but corporate rates shift with the economy. Plus, companies have way more tax tricks up their sleeves.”
“Like offshore companies?”
“Bingo—offshore companies!” Blanca laughed, clearly impressed. “If a person moves untaxed money around, it’s dirty cash—Interpol’s on you. Companies? They can dodge taxes through offshore setups. It’s complicated, but we can dive into that later if you’re curious.”
Dunn waved it off. “What’s perk number three?”
“There’s a third one!” Blanca chuckled. “Say you buy a private jet. Personal purchase? No tax break. Company purchase? It’s a business expense—deductible. Huge difference.”
Dunn’s eyes sparkled. “Wait, so everything could be deductible? Cars, houses, planes—all business expenses? Even dinners, hotels, suits, parties—reimbursable?”
Blanca cracked up. “Theoretically, yeah! But flaunting it like that might look a little tacky on paper.”
Dunn roared with laughter. “Man, there’s always a workaround! America’s rich folks are geniuses—coming up with shameless tax dodges like this.”
No wonder Buffett pays like $1 million in taxes then shamelessly begs the feds to raise rates. Dude, if you love taxes so much, why hire a pro team to dodge ’em? Hypocrite much?
“There’s actually a fourth perk—the one rich folks care about most,” Blanca added.
“What’s that?”
“Estate tax.”
She paused for effect. “It’s over 50%, and after that, you still owe income tax. No one can stomach that. A trust fund’s biggest win? Dodging estate tax.”
Dunn blinked. “For real?”
Blanca nodded. “Before you kick the bucket, turn the trust into a charitable fund. Your kids inherit everything—houses, jets, the works—tax-free. Tons of billionaires ‘donate’ their fortunes to charity for the same reason.”
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