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SVB Update and Bank Collapses Thumbnail

SVB Update and Bank Collapses

Is it 2008 all over again? Should we be worried about the financial system collapsing?

Deep breath. Let's discuss.

On March 10th, Silicon Valley Bank (SVB), a bank catering to startups closed its doors after it could no longer cover withdrawals.1

Days later, regulators also took over Signature Bank.

There's reason to believe a number of other banks may be in trouble.2 Rising interest rates are hitting many banking portfolios hard and weaknesses are emerging.

Should we be panicked about these bank failures?

No. Here's why:

The affected banks are small in the context of the overall banking system.

You can see in the chart above how small the two failed banks are relative to other, larger financial institutions.3

They also serve high-risk niches. These banks have a lot of exposure to cryptocurrencies, startups, and other highly volatile asset classes.4

Those risky assets can make them more vulnerable to bank runs and liquidity issues. Which is what we're seeing happen.

Will more banks collapse?

That’s very possible. Moody’s, a rating agency, reported that it’s watching several other institutions with potential problems.2

Some larger banks may be affected as well, but it looks like regulators are stepping in quickly to protect the overall financial system.

What can we take away from the SVB failure?

We think it's a good time for one of Warren Buffett's famous bits of wisdom:

"Only when the tide goes out do you discover who's been swimming naked."

What he means is that adverse conditions expose vulnerabilities and risky choices.

Many strategies can look brilliant when markets are booming. You don't always know or appreciate the risks until conditions turn against you.

Clearly, a number of institutions are finding that out.

We think there's a lesson here for us as well:

When times are good, we might not worry too much about our income or our expenses. Or the risks we take in the market.

But when times get tough, we start appreciating the risks we've taken and the obligations we've taken on.

Understanding our actual tolerance for risk and our ability to withstand rocky times is absolutely critical.

It's very hard to do when the sun is shining and life is good. But it's a skill well worth developing because we can expect to experience bear markets, recessions, and uncertain conditions throughout our lives.

We don’t know how this situation will play out, but we will be watching closely and will be in touch if we have any specific recommendations for you.


Horizon Capital Advisors

(913) 469-0033


Securities offered through Securities America, Inc., member FINRA/SIPC.

Advisory services offered through Securities America Advisors, Inc.

Horizon Capital Advisors and Securities America are separate entities.

Content created by Snappy Kraken

Trading instructions sent via email may not be honored. Please contact my office at 913-469-0033 or Securities America, Inc. at 800‐747‐6111 for all buy/sell orders. Please be advised that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. The text of this communication is confidential and use by any person who is not the intended recipient is prohibited. Any person who receives this communication in error is requested to immediately destroy the text of this communication without copying or further dissemination. Your cooperation is appreciated.

P.S. If you have any friends or family who are very worried or about to make some financial moves because of the headlines, will you send them this email or ask them to reach out to me? These are the times when an objective, professional take can help folks understand their options and make good decisions.


  1. https://www.cnn.com/2023/03/13/investing/silicon-valley-bank-collapse-explained/index.html
  2. https://www.cnbc.com/2023/03/14/moodys-cuts-outlook-on-us-banking-system-to-negative-citing-rapidly-deteriorating-operating-environment.html
  3. https://www.washingtonpost.com/business/2023/03/13/bank-failure-size-svb-signature/
  4. https://www.cnbc.com/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

Chart source: https://www.washingtonpost.com/business/2023/03/13/bank-failure-size-svb-signature/

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Securities offered through Securities America, Inc., member FINRA/SIPC.

Advisory services offered through Securities America Advisors, Inc.

Horizon Capital Advisors and Securities America are separate entities.