Member Info for Investing101

The Middle East have opened and it’s red all over. Red day everywhere tomorrow.

It’s the tech stocks that investors will be diversifying from.

Check out the boards at Lloyd’s and Barclays. Most are expecting a drop tomorrow but in all honesty, I wouldn’t be surprised if the Dow opens in green. It’s just been such a strange last few years, can’t call anything right now.

When money was cheap as dirt in 2021 and people were making huge deposits- SVB bought government bonds. At the time the fed rate was low as ****. Let's say 1%
Fast forward to today- the free money spigot has been turned off so VCs are also reducing funding to startups. In order to keep operating, startups need to withdraw money from the bank. SVB had a ton of money tied up in these government bonds. The bonds themselves are secure but don't pay out until they mature- however you can sell your bonds to someone else for cash. Problem is- the fed has been hiking interest rates steadily so a bond from 2021 may only pay out 1% but a bond purchased today may pay out 5%. Nobody is going to buy a 2021 bond unless it was cheap so SVB needed to take a loss because the bonds they bought in 2021 pale in comparison to bonds you can buy today that pay out 5%. So they basically had to take an L to provide liquidity to their clients.
EDIT:
For what it's worth- SVB was solvent. They weren't upside down. The deathknell for SVB was Foundersfund- a VC- telling startups to pull their money out of SVB because they felt it too risky. This created a run on the bank. This then caused several other VC firms to tell their portfolio companies to pull their money as well.
SVB had assets- just not instantaneous liquidity for everyone to pull their money because again- locked up in government bonds.
SVB likely could have rode it out had the VCs not instigated a run.

Source - https://old.reddit.com/r/Economics/comments/11nucrb/silicon_valley_bank_is_shut_down_by_regulators/jbq7zmg/

Interestingly, soon as I read the title of this thread, I was going to link that post but seems like that’s the one you linked. Great explanation that.

The US economy is heading to the gutters mate.

It’s such a risky time to sell out because who the hell knows what’s going to happen. The FED could keep this mirage running for as long as they wish, meanwhile there is lots of reason for concern.

THG feels a bit different to everything else because they lost 90% of their value, in a crash, I doubt they’ll fall to levels that other companies would. I feel we’re literally at the bottom now 40-60p.

Okay thanks. I thought you were denying it for a moment. Most people in the country are just concerned about Gary Lineker and Prince Harry to even see what’s happening here and the impact it has on them.

*The US seems to be in a real mess at the moment.*

How did you come to this conclusion? - I’m not sure if you’re being sarcastic or if you live in a bubble but here are a few reasons why people have been freaking out:

The Fed have been printing money non stop in the last few years - Almost 1/5th of all dollars were printed in 2020 and that was years ago, it’s even worse now.

Now let’s look at Credit Card debt, it’s an all time high right now.

Inflation has increased in the US and Powell just said a few days ago that they have a long time to go to reduce inflation. To fix this inflation things have to worse to get better - Bankruptcies and job cuts.

US Debt has been increasing and increasing meanwhile the government have been providing billions to Ukraine to fund their war which has almost United a divided nation. The country are still dealing with printing money and handing out trillions to their people during covid.

Also, you may have heard of Silvergate and SVB over the last week or so? Remember 2022 was the worse year for US stocks since 2008 - https://www.cnbc.com/amp/2022/12/29/stock-market-futures-open-to-close-news.html

I’d like to get your thoughts on why you think the US aren’t in a mess right now.

Literally have no idea but the US are claiming that SVB is a one off and everything else is fine, that’s exactly what they said between 2006-2008 too.

https://theguardian.com/business/2023/mar/11/government-to-meet-tech-firms-following-collapse-of-silicon-valley-bank-uk

The Bank of England, absent any meaningful further information, intends to apply to the Court to place Silicon Valley Bank UK Limited (‘SVBUK’) into a Bank Insolvency Procedure.

https://www.bankofengland.co.uk/news/2023/march/boe-statement-silicon-valley-bank-uk

I should say, unless you’re into stocks, most people have no idea about this. Especially in the U.K. as we are more concerned about Gary Linekar and the Royal Family.

Everyone is expected a fall so it’s likely going to be a bullish day because that’s just how the stock market has been the last few hours. Complete chaos, volatile and no one can call anything correctly.

If everyone is expected a red day on Monday, it’s likely to be a bullish day because the stock market is just like that now.

Lol @JayK

History tells us that this kind of even is the beginning of something larger to come. All the fear mongering folk like Peter Schiff will say - I told you so.

But the Fed have been printing money non stop, inflation is going crazy worldwide, countries are collapsing, even though you may not notice is as the news only cover the daft royal family and Gary Lineker and there is a war going on that could easily spill into a world war.

The world is not in a good place right now. Simple as that. Worse than it was pre 2008.

16th largest bank.

Reminder that SVB were part of the 20 biggest commercial banks in the US and the biggest to fail since Washington Mutual in 2008.

This is the worst thing to be an investor so everyone is in pain, not just us. However it is also these times that have the best opportunities. Just depends on how you look at it.

As soon as he suggested that a move to the US is a good opportunity for ARM, what happens? There is a massive sell off, Silicon Valley bank has collapsed and the Dow Jones have been in red for the last few days with tons of panicked investors.

I am pretty sure that MM is cursed at this point.