By: Dave Nickle, HNW Financial
We’ve received a few queries from clients regarding the recent collapse of SVB (Silicon Valley Bank), Signature Bank and Silvergate Bank. Although HNW Financial clients have no exposure to these banks we thought you’d nonetheless appreciate our perspective on this recent event, which has caused some unease for many investors, especially those with significant exposure to banks in general. Below is the response I sent to one of our very favorite clients this morning (I have only slightly edited it for client confidentiality – and suitability! 🙂
Please be assured you have absolutely no exposure at all to SVB, Signature or Silvergate, nor do you have any exposure to the gross & crooked underworld of cryptocurrencies for that matter. The most recent casualty, SVB was a major lender to venture capitalists and startups – many of which had little to no earnings. Because of all the turmoil in the startup world and the rise in interest rates globally, there was a run on this bank’s deposits, which required financial regulators to step in. I believe many investors still have PTSD from the 2008 financial crisis when Bear Stearns & Lehman Brothers collapsed. As a result, this recent event has caused some ripples in the financial markets especially for smaller regional banks.
Because you have a broadly and very beautifully diversified portfolio actively managed by some of the best global portfolio managers in the world you have absolutely nothing to worry about. We don’t just grow our client’s wealth, we also protect it very effectively, as you know…
It also doesn’t hurt that you have a team of the world’s greatest and best (and most modest) financial planners on God’s green earth quarterbacking your family’s financial plan. You will not only survive any and all of the turmoil that afflicts the masses – you will actually profit from said turmoil… just like you did from the tech bubble blowout in 2000, the terrorist attacks in 2001, the corporate malfeasance and accounting scandal in 2002, the financial crisis in 2008, the Eurozone crisis in 2010, the downgrade of US debt in 2011, the fiscal cliff in 2012, the collapse in oil prices in 2015, the Covid crisis in 2020, and yes, the current situation of 40 year high interest rates, the collapse of glamour & meme stocks, FTX and now SVB…. whew!
And despite all of the aforementioned carnage your portfolio has not just survived, it has prospered. As importantly, it will continue to grow AND beat the living daylights out of inflation, from now till the yawning grave comes for us all… which hopefully isn’t for three or four more decades so we can continue to compound the living daylights out of your investments with us…
So there you have it – I sincerely hope these words have inspired you as much as they did me!
Give me a shout if you need any more reassurance, we’re all here for you anything you need. -Dave-
We would also like to add one more point here. Banks – in general – are very strong, and they are very well capitalized. As a group, they are in a much better state than they were during the 2008 financial crisis. They definitely are NOT in the same position as SVB, and other banks that were highly exposed to a fast-growing but cash-hungry group of clientele – dominated by fast-growing but often profitless companies – and you may have guessed it – this would include some of those sleazy cryptocurrency startups…please don’t get us started!
Brad, Stu & I invite any of you, to call any of us, if you would also appreciate some reassurance, if you have any questions, and also if you’d like to add more money to any of your portfolios with us to take advantage of this “crisis du jour” Alas, these sales are always only just temporary!
We’re all here for & we promise if you do reach out, we will brag about our firm just as modestly as we possibly can. Admittedly, my esteemed colleagues are a wee bit better at that than yours truly. But I’m working on it! 😉
