SVB collapse

Sea_Shell

How worried should we be?

Could this trigger another 2008?

https://www.bbc.co.uk/news/business-64915616

dale_cotterill

It 'shouldn't'. SVB was a classic example of herd mentality and Silicon Valley.

Companies got funding from all the same VC's. They got a load of it, and all put it in SVB, because you know, they all do the same thing. Times got hard, and they all started withdrawing it. Then it got a bit edgy, so the VC's which gave all the startups money then told them all to withdraw it.

Consequently, SVB had no diversification, it took deposits from all the people who behave identically and couldn't meet withdrawal requests as it locked it's money away in long term government debt which has lost value. Also 95% of it's deposits are over ther 'FSCS' limit, to use our parlance.

Most other places are much more diversified.

Swipe

Don't look at your portfolio today unless you want to be depressed. My Vanguard global all cap fund just lost 2 month's gains in 2 days

strawb_shortcake

Swipe said:

Don't look at your portfolio today unless you want to be depressed. My Vanguard global all cap fund just lost 2 month's gains in 2 days

I was planning on buying this month so works in my favour

bostonerimus

SVB was a very niche bank that got crushed by tech/VC contraction and rising interest rates. Most other banks will be more diversified and the larger ones will have been stress tested to a higher extent so I don't think there's an issue past a general poor economy. I have a friend who worked for SVB on the East Coast so there will be some interesting beers with him soon.

Bravepants

https://monevator.com/ has an article on this on its front page.

adindas

I posted this Analyst Opinion Regarding SVB Bank and why they might be different with the case of Lehman Brothers in 2008?

https://forums.moneysavingexpert.com/discussion/comment/79911025#Comment_79911025

https://www.youtube.com/watch?v=sA0ok3jI-uI
Why SVB isn't a canary in the coal mine for regional banks, according to top analyst Gerard Cassidy CNBC Television Mar 9, 2023.

lon_don

Bravepants said:

https://monevator.com/ has an article on this on its front page.

The article mentioned FDIC, but didn't touch on the one important point post-failure: what is FDIC going to do with the 93% uninsured deposits ? If by Monday morning FDIC hasn't organised some sort of rescue to make whole ALL depositors  (similar to JPM being asked to buy the part of Washington Mutual holding all the deposits, in 2008), then the immediate read-across shall be that the FDIC (and by extension, our own FSCS)  guarantee's cap is real and rigidly enforced, that in 2023 governments (not short of cash) won't accept to bail out depositors under any circumstance. Otoh if all uninsured depositors are made whole by FDIC, then the message is the cap is meaningless.

mark_cycling00

Monday midday could be a good trough to buy into.

Just after the "I'm getting out now!" Posts on here...

Swipe

mark_cycling00 said:

Monday midday could be a good trough to buy into.

Just after the "I'm getting out now!" Posts on here...

Yep, I'm definitely buying on Monday.

LHW99

bostonerimus said:

SVB was a very niche bank that got crushed by tech/VC contraction and rising interest rates. Most other banks will be more diversified and the larger ones will have been stress tested to a higher extent so I don't think there's an issue past a general poor economy. I have a friend who worked for SVB on the East Coast so there will be some interesting beers with him soon.

Although there is going to be a hit on sentiment generally, and sentiment seems to underlie at least 50% of the market moves.