A Bank Collapsed, Who Cares

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Quote

“The market is never wrong in what it does, it just is.” - Mark Douglas

Banks Go Belly Up

With the amount of fear being spread by CNBC and investors this week, you’d think Earth was about to get hit by another dinosaur-killing asteroid.

For better or worse, it’s actually a lot more boring than that for 99.9% of the population.

In case you haven’t heard, we just had the second-largest bank collapse in US history. At the end of last week, Silicon Valley Bank (SVB) went under followed shorty after by Signature Bank. Since then the government has stepped in and guaranteed depositors their money back, woohoo crisis avoided.

If you want the details on the collapse I’ll link an article at the end of this that covers the entire story. In this post though, I’m going to discuss why reading that article will likely have zero impact on your financial future.

Sh*t Happens

Bank bailouts aren’t an everyday thing and they for dang sure aren’t a good look for the economy. No one wants to see $150 billion get erased overnight.

But think about it…

No one wants to see the global supply chain shut down because of a pandemic.

No one wants to see inflation run wild month after month.

No one wants to see world wars or terrorist attacks take place.

Unfortunately, we live in a world where sh*t happens.

These “headline” events grab your attention, pull at your emotions, and make investors question the future. The fear of uncertainty is no joke, but as an investor one must realize these events do occur. In case you need a reminder here is a picture from a recent post 7 Images Every Investor Needs To See.

So these events come and go, but why do we see investor behavior repeat time and time again?

The Herd Mentality

People tend to think and behave like those around them. Here is an example.

Your favorite football team is beating the worst team in the league by two touchdowns with 2:30 on the clock. In your head, you know the game is likely over, but all of a sudden your buddy that is one-too-many bears deep mentions “they can come back easily.” Your other homie chimes in “yep just have to hit a hail mary and recover the onside kick.”

All of a sudden you are tuned in watching every tick of the clock because your hammered friend mentioned a comeback. In reality, your team had a 90% chance of winning the entire time, but your thoughts wouldn’t reflect that statistic.

That my friend is a herd mentality. (My man David has fallen prey to the herd)

This same example repeats itself every time the market witnesses a “scary” event. The only difference is the one starting the rumor isn’t your alcoholic friend, it’s multi-billion dollar media organizations.

Media Wars

Let’s be honest, did you even know Silicon Valley Bank existed before last Friday?

CNBC, MarketWatch, The Wall Street Journal, and Bloomberg all want one thing at the end of the day, your click.

How do they do this?

By coming up with the most outrageous headline they can imagine and spreading fear.

Pro-tip, turn off notifications for these apps so you aren’t getting blasted with “S&P Rally Takes Flight” one day and “S&P Crashes Hard” the next.

Their job is to make you feel like the world is ending, or it’s having its best day in history. No in-between.

Conclusion

Despite all the crazy events, herd mentality, and media wars the S&P 500 has averaged 10.4% with dividends reinvested over the last 50 years.

*not investment advice, but here is my plan.

If things go up, it might be a good time to buy.

If things go sideways, it might be a great time to buy.

If things crash through the floor, it might be a generational opportunity to buy.

You see what I’m saying, Cade.

Cade's Finds

What Just Happened - Shaan's breakdown of the SVB collapse is both brilliant and entertaining.

26 Uncommon Business Ideas for 2023 - Interesting Youtube video on some not-so-mainstream business ideas.

Best Memes

Fire up the money printer.

Didn’t even know Kohl’s cash was a thing lmao.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.