The sudden and unforeseen collapse of Silicon Valley Bank in California and Signature Bank in New York, on March 9, 2023, led to the decline in bank stocks of as much as 60% on Monday, March 13, 2023. In the short term, the volatility of the banking sector will remain, but in the long term high quality bank stocks will recover, as they did after the 2008 financial crisis. This decline provides an excellent opportunity for those who can plan for the long term.
Historically, Bear markets are followed by Bull markets, where the losses are more than recovered for those investors with the stomach to stick it out. Indeed, the best growth in the market most often occurs in this subsequent Bear market. The result is that the Bear market is an opportunity seized by legendary investors, such as Warren Buffett, to invest in depressed stock and take advantage of their decline in value. Individuals who own or buy banks stocks can similarly leverage these depressed shares to make gifts that will appreciate more rapidly in the future, as well as taking advantage of some current income tax benefits.
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