What’s going on?
The markets are tumbling, and fear has begun to seep into most every corner of the investor mindset. “What if…” is the prevailing question as markets move aggressively in response to the recent Silicon Valley Bank and Signature Bank collapses over the last week. “What if this spreads to other banks? What if this means another recession? What if my bank fails?”
These are understandable questions that feed the negative emotions most everyone is feeling as we find ourselves in the midst of another apparent banking crisis. It is always prudent to take a deep breath, step back and evaluate whether the initial spike of fear and panic that accompanies these headlines is truly necessary. This article details what went wrong at SVB and Signature Bank, and what the regulators are doing to prevent this from spiraling into a more difficult systemic financial issue. Knowledge and understanding of what is driving markets either up or down can go a long way towards decreasing fear and bringing your focus back to what you can control.
What does this mean for you?
The investment market volatility due to the recent collapse of SVB and Signature Bank is likely the closest exposure you will have to these two banking failures. The markets will adjust to the changing conditions and, once stabilized, will refocus on inflation, the job markets and the trajectory of interest rates.
The Federal Reserve may pivot on interest rate increases in the short term. But they still need to ensure inflation comes back down before ceasing rate hikes altogether. This article details what markets think the Fed will do, or not do, with interest rates given the recent banking developments.
What should you do?
Yes, the headlines are scary and the “What ifs” are the logical reaction to uncertainty. Focusing on your long term investment and financial objectives will help to temper the initial fearful emotions. Stick to your plan, think long term, and don’t miss the forest for the current tree.
I am here to help answer any questions you may have, so do not hesitate to reach out. We can dive deeper into your specific situation and see if your concerns are warranted or could be allayed with more information and conversation. I am always happy to hear from you.
Regards,
Matt McKay