Our Thoughts on Recent Bank Failures

You have undoubtedly heard/read about the recent failures of Silvergate, Silicon Valley Bank and Signature Bank.  The media has predictably pounced on these bank failures to fan fears of a spreading financial contagion similar to the Global Financial Crisis of 2008.   Fortunately, the U.S. government has announced it is guaranteeing all deposits of Silicon Valley and Signature, importantly even those amounts above the $250K FDIC insurance limit.  The banks’ investors will be wiped out (as they should), but the deposits are safe.  The situation is “fluid” and many are eyeing banks warily.  President Biden and administration officials are trying to restore confidence in the banking system by reassuring depositors their funds are safe, pledging to take “whatever action needed.“   We hope this means the government will formally “back stop” deposits at all banks.

It is natural to feel anxious at times like these.  If you are uncomfortable with your cash deposits at your financial institution, we can purchase short-term U.S. Treasury bills for you that will yield about 4.5% until the storm passes.

Finally, these bank failures are a perfect example of our “non-prediction” in January that something would happen that surprises us in 2023 (and it’s only March!).  In 2020 it was COVID.  It’s always something.  We’re always available to discuss.

Forecast For 2023

In full disclosure, the following forecast is nearly identical to my forecast from last year and years prior to that.

  • The economy/market will do something that surprises us (and the experts).  In hindsight we will wonder how we didn’t see it.
  • The financial media will emotionalize headlines and short-term market moves to entice you to tune in – so they can achieve better ratings.
  • Investors who watch the news and stock market often will experience more stress than those that don’t.
  • Investors that move to cash, waiting for a “better time,” will suffer significant uncertainty and anxiety about when and how to get back in.
  • Your investment decisions and reactions to market events will have a significant impact on your personal investment return.
  • You will be tempted to change your investment strategy based on market performance, expert forecasts, and/or your personal beliefs about the future.

Conviction, patience, and discipline are virtues every investor should develop. They aren’t easy, yet they are essential for your success. As your adviser, one of our most important roles is helping you ignore the noise and focus on what really matters to your financial success.

The opinions expressed in these articles are those of the authors as of the date the article was published. These opinions have not been updated or supplemented and may not reflect the authors’ views today. The information provided in these articles are not intended to be a forecast of future events, a guarantee of future results and do not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular stock or other investment.