With the collapse of Silicon Valley Bank, everyone is looking at the banking industry. Some think it has more room to fall, while others believe now is the best buying opportunity we have seen in a decade.
At this time, I believe it is too hard to pick which direction banks or the market overall is heading.
My reason for saying that is that very few people fully understand the real risk to the banking system at this time.
Well, that certainly wasn’t the case for SVB.
While I understand that when Janet Yellen or Fed Chairman Powell make these statements, they are speaking about the whole industry, not one-off banks, as we saw during the financial crisis in 07-08, it only takes a few small cracks in the system to open the flood gates.
And when the 15th largest bank in the U.S. fails, it’s hard to ignore that crack, despite the argument that SVB is different from most other banks because they lend to riskier clients in the form of ‘start-up’ businesses.
The argument that SVB is and was different may make sense, but if that is true…
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