Market Insight March 13, 2023

Here is the Market Insight for the week of March 13, 2023:

SI and SIVB Pull Down Other Financial Stocks

What is it?

The recent moves of Silvergate Capital (SI) and SVB Financial Group (SIVB) sparked fear in the minds of many investors. Both firms were positioned to maximize growth in a great economy. However, they were not positioned well to weather the storm of high interest rates and large withdrawals. 

“The S&P 500 bank index tumbled nearly 6% on Thursday in its biggest one-day drop in over two years as investors fled the industry following SVB Financial Group’s share sale announcement and crypto bank Silvergate’s decision to wind down operations.”*

Why does it matter?

The Financial Sector was impacted the most. It will be interesting to see how the Federal Reserve discusses these changes. Will this be enough to slow the rate of expected interest rate hikes? It may be too soon to tell. However, financial stocks fell at the end of last week. We will see if the banks still standing have what it takes to make it through a contracting economy. 

Change is the only Constant

What is it? 

“Airbnb (ABNB) CEO Brian Chesky sounded off on AI on March 6 at Morgan Stanley’s Technology, Media & Telecom Conference, referring to it as a historic paradigm shift. ‘Who knows what’s going to happen, but what appears to be true is that we’re experiencing a platform shift, that’s what we typically call this.’ Chesky said”**

Why does it matter?

Things change in the markets as the economy evolves. Our aim is to be positioned correctly to take advantage of those shifts in the market. You can tell we are targeted that way based on the investment models we offer. One of those models is the Tactical (actively managed) MegaTrends model which is used to add exposure to investments in MegaTrends or companies growing during a platform shift. 

“’So, let’s ask the question, which companies got left behind by the internet, and which companies kind of rode the internet? I think the best way to understand AI is actually so simple, it’s just culture,’ Chesky continued. ‘The companies that will ride AI are the companies with innovative cultures’”.**

Other articles we found interesting this week:

Silicon Valley Bank had more red flags than a CCP meeting but regulators cared about climate not bank risks

DICK’S the Official Sporting Goods Retail Partner of the NCAA

Fed announces regulatory review of Silicon Valley Bank failure

Current 401(k) portfolio

Our last 401(k) portfolio reallocation: 5/19/2022. 

Want more information?

The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach. 

Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.

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Sources:

*Sinéad Carew. “Banks tumble as SVB ignites capitalization fears”. 3/9/2023. https://finance.yahoo.com/news/banks-tumble-svb-ignites-broader-173433069.html

**Alexandra Garfinkle. “Airbnb CEO: Companies that talked about crypto last year and AI now ‘probably don’t understand either’”. 3/12/2023. https://finance.yahoo.com/news/airbnb-ceo-companies-that-talked-about-crypto-last-year-and-ai-now-probably-dont-understand-either-145847071.html

IMPORTANT DISCLOSURES: 

Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation. 

Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice. 

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Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/.  Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.

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IMPORTANT DISCLOSURES:
The information provided is intended to be educational in nature and is not intended to be a recommendation for any specific business or tax strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation of services.

Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any business or tax planning decisions, an individual should seek individualized advice from a personal financial, tax, legal, or business consultant professional that takes into account all of the particular facts and circumstances of an individual’s own situation. No person associated with Breakaway Financial Group LLC is a licensed attorney, and the information contained herein should not be considered legal advice.