Impulse Decisions + Investing

March 8: Silicon Valley Bank (SVB) announced it had raised $500 million from General Atlantic and planned a $1.25 billion common stock sale, plus another $500 million of depository shares.

March 9: When markets opened, SVB's stock fell 30% immediately and 60% in total. Many started pulling their money out, $42 billion in total by the end of the day.

March 10: U.S. regulators took control of the bank Friday morning, shutting it down.

It was on March 9th that people were sure we were headed for Great Financial Crisis 2.0. Since then, the S&P 500 is up 2.77% as of Friday’s close, represented in the chart below. Another great example of why we recommend against quick, rash, and impulsive decisions.

There isn’t enough information out yet. It’s unwise to take the failure of one or two banks and extrapolate that across the entire global financial system. That strategy, more often than not, will lead to poor results. Think of all those investors who sold on March 9th, 10th, or 11th. As you can see, there was a pretty good selloff. Those impulsive investors now watch with envy as the market slowly climbs higher.

Ignore the noise. Stick to your plan.

Shean