Over the weekend another big bank made national news for all the wrong reasons. Silicon Valley Bank, the darling of the Bay Area venture capital community and the bank of choice for numerous tech startups, abruptly collapsed. Worried about possible contagion in other small banks, the FDIC quickly stepped in and guaranteed all deposits above the normal insurance limits. But while the immediate financial fallout may appear contained for nervous SVB depositors, the ripple effects are still unfolding in the wider banking system. To put it bluntly, the whole situation is a mess.
I think it’s safe to say that most of you don’t have more than $250k sitting in cash in the bank, so the good news is that you’re probably fine and shouldn’t be too worried. But I do think there’s a larger lesson that attentive investors can learn from the missteps of SVB. So while the talking heads on TV and social media compete for the hottest take on complex banking policy you probably don’t even care about, let’s talk about a few simple takeaways for your own investments.