Investing During Crisis: What You Need to Know About Recent Events in Silicon Valley Bank

The recent banking panic in Silicon Valley Bank (SVB) has caused many investors to question the stability of the stock market and the safety of their investments. As a result, many have become hesitant to invest in the market during this period of uncertainty.

However, it is important to note that this situation is not expected to be repeated in larger banks, which are part of many stocks and dividend stocks funds. According to financial experts, investors should base their investment strategy on fundamental analysis, which means investing in companies with stable revenues, a return on investment, and diversification of their products or services.

Silicon Valley Bank, founded in 1983, was a commercial bank that primarily financed start-up companies in the technology sector. As the COVID-19 pandemic hit, many of these companies kept their money in the bank in deposits. In turn, SVB invested these funds in instruments that are generally considered safe, such as US Treasury bonds and mortgage-backed securities. However, the increase in the interest rate by the Federal Reserve caused the value of some of these instruments to decrease. With the announcement of the losses incurred from these investments, customers became concerned that SVB might not be able to pay their deposits, and a mass withdrawal of deposits ensued. The bank was forced to liquidate its positions in bonds and other financial instruments to pay customers, which resulted in additional losses.

The US government took action to maintain confidence in the banking system and announced that depositors would have access to their deposits, resolving the situation. While this scenario is not expected to be repeated in larger banks, the prices of shares in the larger banks experienced some effects due to this event.

So, what does this mean for your investments? 

First and foremost, your investment strategy should be based on fundamental analysis. This means that you should focus on companies with stable revenues, return on investment, and diversification of products or services offered. By doing so, you'll be able to build a strong and resilient portfolio that can weather market downturns.

But what happens when the market experiences a downturn, like it's been the case lately? Well, the board of brokers recommends taking advantage of the opportunity to invest during such crisis periods. Historically, after difficult times in the stock market, a period of growth and development follows. While the exact timing of this cannot be predicted, investing during these periods can lead to great returns in the long run.

It's also important to actively monitor prices, quarterly reports, and events in the companies that are part of your funds. By doing so, you'll be able to make informed decisions about when to buy or sell stocks.

Now, you might be wondering if it's a good idea to sell your positions during a market downturn. Our answer is simple: unless you have an urgent need for the invested funds, don't sell. The board of brokers recommends continuing to invest in stocks for the long term.

During this period of uncertainty, the board believes that the negative market reaction is already reflected in the prices of banks and some companies in other sectors. Therefore, they do not expect further price declines and recommend taking advantage of the lower market prices and continuing with regular investments.

In conclusion, investing during crisis periods can be a great opportunity to build a strong and resilient portfolio. By focusing on companies with stable revenues, return on investment, and diversification of products or services offered, and by actively monitoring prices and quarterly reports, you'll be able to make informed decisions that can lead to great returns in the long run. So don't be afraid to take advantage of lower market prices and continue with regular investments for the long term.