For Over 25 Years, I’ve Seen The Same Financial Mistakes Repeated

There’s a certain herd mentality in investing, and when times are uncertain, it doesn’t take much to get the herd to stampede. That’s what happened to Silicon Valley Bank (SVB
VB
), resulting in the second-largest bank failure in US history. Its stock price collapsed and likely won’t trade ever again, even though it was trading at over $267/share just a few days ago!

One of the steps leading to SVB’s collapse occurred when Moody’s notified it of a pending downgrade due to a decline in the fair value of bonds SVB had previously planned to hold to maturity. The bank planned to sell $20 BN worth of low-yielding bonds at a loss to shore up liquidity and reinvest proceeds in assets generating higher returns.