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