March 13th, 2023

Good Afternoon Brynne,

The news late last week and throughout the weekend of the Silicon Valley Bank failure brought about that uncomfortable reminder of what the markets, and you as an investor, went through during the financial crisis. The collapse of the second largest bank since 2008, as with any major market news, can rock the markets. Regulators approved plans Sunday to backstop both depositors and financial institutions associated with Silicon Valley Bank. Ironically, in contrast to 2008 where large banks were the risk, today it is the opposite with smaller and regional banks in focus. We do not believe this is wide-spread contagion at this time and understanding the strength of each individual banking institution is important.

To better understand the detail behind how this happened and what it may mean for the markets, we are attaching commentary from our Meridian Tucson Advisory Business Council member, Peter Costa, that explains his thoughts as a 40-year trader on Wall Street and Former Governor of the New York Stock Exchange. He clearly and rationally explains his take on the current situation and we believe it is worth sharing with our clients and business partners.

What does this specifically mean to you:

Overall, we have minimal exposure to the financial sector and as a result, we aren’t currently feeling major impact from the drop today in financials. We have remained more defensive since last year and continue our diversified and disciplined approach to investing. Limiting your overall exposure to any one company stock and/or economic sector is an important piece of our management process that is foundational in our approach. We would like to share a few words of advice.

1.      Don’t panic! We will hear about this on the news in the days and weeks to come. Trust your strategy and allocation that is based on your individual risk, goals and time horizon.

2.      FDIC insurance limits at the bank cover up to $250,000. If you have funds in excess of that amount and are concerned, you should consider moving those funds to another bank to ensure you are protected within the FDIC limits or contact us for options within your investment account.

3.      As Peter Costa mentions in his commentary, look for opportunities when selloffs take place in the market. Be aware of opportunities that are presenting themselves. 

4.      Call us if you have any questions/concerns or would like to review your current holdings and allocation.