Investing Thread

[ZiggysFryBoy]

This conversation got infinitely dumber when someone joined in - and that someone wasn't Jesmu.

Yup, ole ZFB single handedly made scoop dumb.

You've been attacking me a lot lately.  Stalker. 

[rocket surgeon]

This conversation got infinitely dumber when someone joined in - and that someone wasn't Jesmu.

classic come back when ya don't like the message...or the messenger.  you forgot the racist phobe stuff too

[rocket surgeon]

I'm pretty sure he does tho...

I don't agree with Hards on a lot, but making incorrect claims or trying to knock his situational intelligence instead of his points is a bad look, my man.

i didn't really knock his points until he personally attacked me.  i don't necessarily disagree with his "late stage capitalism" claim however

[MUBurrow]

Yup, ole ZFB single handedly made scoop dumb.

You've been attacking me a lot lately.  Stalker.

Haha didn't mean you. I meant our resident DVR'd episode of Tucker Carlson Tonight come to life. I honestly don't recall attacking or even responding directly to you in any other thread, but sorry if you feel singled out by me.

[ZiggysFryBoy]

Funny how the only people that talk about tucker Carlson on this board are lefties.

[MUBurrow]

Funny how the only people that talk about tucker Carlson on this board are lefties.

Meh, I don't really care how anyone spends their time or what they watch, but "there aren't enough smart blacks and gays to populate bank boards responsibly" is a step too far to me.

[Jockey]

Skatastrophy

You are correct that I have talked the economy a great deal in an investing thread. I guess that is because I do not believe that the stock market has been a reflection of the economy in some ways. Free money from the Fed altered our economy in a way I have never seen before and quite possibly covered up a lot of cracks in the economy. Truth be told, I have zero idea on how the economy works anymore and even less on where to invest money today.

Feel free to highlight "I have zero idea" and agree that I do not any idea.

I don't disagree with you a lot on this subject other than blaming 'free money'.

Greed by the people who already have everything - which is the #1 cause of this failure - is much more serious of a problem.

It is not the middle or lower class that caused this failure.

[ZiggysFryBoy]

Meh, I don't really care how anyone spends their time or what they watch, but "there aren't enough smart blacks and gays to populate bank boards responsibly" is a step too far to me.

Who said that?  Tucker?

Thanks for proving my point.

[Goose]

Jockey

It was not just the wealthy that were greedy or used poor judgement. 15% of American's that have car payments are paying over $1k a month. Those folks took advantage of loose lending and many likely overextended. The amount of money on excess spent by lower or middle America has come from cheap, easy money. We have been brainwashed into being a consumer before anything else and it has become an addiction.

I would argue that lower and middle class America is a big part of the issue. 1% folks always find a way to make money and that makes the world go round. This time the masses fueled the issue by crazy spending, imo. Plus, I believe cheap money kept an awful lot of people employed over the past decade and I still believe we will see middle/upper white collar jobs getting hammered if things go badly.

[MUBurrow]

Who said that?  Tucker?

Thanks for proving my point.

I don't know what Tucker said.  I used Tucker was a stand-in for the anti-woke echo chamber generally.  If you want to accuse me of being obsessed with you, or Tucker, or whoever else to distract from the fact that rocket is espousing an undefensible position and that you don't like him being called out for that - fine, you can have that W.

Edit just to add that I don't like the idea of being a guy who is obsessed with or targets anyone else, so I looked back through my posts. I haven't quoted you in a response since Dec 9 and that was a friendly discussion about whether we'd be rooting for Morocco in the WC.  Before that we're back to October and that was very tame too. So I'm not really sure what you're talking about.

[ZiggysFryBoy]

I don't know what Tucker said.  I used Tucker was a stand-in for the anti-woke echo chamber generally.  If you want to accuse me of being obsessed with you, or Tucker, or whoever else to distract from the fact that rocket is espousing an undefensible position and that you don't like him being called out for that - fine, you can have that W.

Edit just to add that I don't like the idea of being a guy who is obsessed with or targets anyone else, so I looked back through my posts. I haven't quoted you in a response since Dec 9 and that was a friendly discussion about whether we'd be rooting for Morocco in the WC.  Before that we're back to October and that was very tame too. So I'm not really sure what you're talking about.

Alright, fair.  I thought you were taking shots at me.  My error.

[Pakuni]

Who said that?  Tucker?

Thanks for proving my point.

The Wall Street Journal.

https://www.vanityfair.com/news/2023/03/wall-street-journal-column-silicon-valley-bank

[MUBurrow]

Alright, fair.  I thought you were taking shots at me.  My error.

All good - and I'm sorry I came in so hot.

[TSmith34, Inc.]

The Wall Street Journal.

https://www.vanityfair.com/news/2023/03/wall-street-journal-column-silicon-valley-bank

Who owns the WSJ again?

[Hards Alumni]

Is the Investing thread really not going to discuss bank failures?

I go out of town for 4 days and this place in in shambles. 

[Skatastrophy]

Is the Investing thread really not going to discuss bank failures?

I go out of town for 4 days and this place in in shambles. 

Credit Suisse got acquired (or is getting acquired) for pennies on the dollar.

First Republic will probably go through the same thing (my feeling, no inside info)

I think this turns into more consolidation in the coming months.

[jesmu84]

Is the Investing thread really not going to discuss bank failures?

I go out of town for 4 days and this place in in shambles. 

Everything is backstopped now. There is no failure

[dgies9156]

Almost everyone is completely missing the downfall of SVB. It wasn't a credit issue at all. It was a cash management issue.

For those of you intrigued, SVB will turn out to be one of the most colossal regulatory failures this side of Bernie Madoff. The reason is the FDIC, State of California and the Federal Reserve failed to control risk and fast growth at SVB. That bank went from asses of $70.1 billion in 2019 to $211.4 billion at December 31, 2022. No bank can increase its size threefold in three years (absent a merger of equals) without taking excessive risk. If you don't believe me, examine the origins of the savings institution crisis in the early 1980s.

What happened was SVB, to bolster its earnings, took risk by betting that interest rates would not rise. That took the form of a large purchase of 10 year bonds. The bonds were backed by uninsured deposits, much of which was considered core. Core means that those deposits are less sensitive to market interest rates and will stay with a bank indefinitely. In effect, SVB was treating their deposit base the way a bank would treat your checking account -- it's going nowhere because you value things other than the highest rate. There are systems, measurements and analytics in place that measure interest rate risk and simulate the impact of rising interest rates on economic value of a bank's equity and on its net interest income. I'm wondering what SVB's systems said.

None of this is criminal. It's stupid! The regulators should and could have said, STOP!!!!! They have what's called a "Matter Requiring Attention" or "Matter Requiring Immediate Attention", which are orders to Management and a Board to change a business strategy. They also have  Cease and Desist Orders ("C&Ds") that require a Management to stop an abusive action or "else." "Else" is a Civil Money Penalty leveled against Management and the Board of Directors.

So, Management was stupid for failing to understand the risk they were taking and regulators were idiots for not stopping it. The markets are paying for it. The deposit insurance fund is paying for it and the American public is paying for it in a perception of lost confidence in the financial system.

Oh, and most of the media covering it still hasn't figured out what's really happening! Or that they're part of the cause!

[GOO]

My understanding is that they knew the risk, but like the profits.
And even discussed this. 

Also, they considered each company with deposits as a separate entity. But it turned out all these different companies were funded by a few VC companies, So once they went looking for liquidity, it was a huge run, which would've been slower, if in fact, it was many unrelated companies. Instead, VC's told all there companies to pull their funds.

[Hards Alumni]

My understanding is that they knew the risk, but like the profits.
And even discussed this. 

Also, they considered each company with deposits as a separate entity. But it turned out all these different companies were funded by a few VC companies, So once they went looking for liquidity, it was a huge run, which would've been slower, if in fact, it was many unrelated companies. Instead, VC's told all there companies to pull their funds.

Exactly.

[jesmu84]

Is there any evidence that the VC folks who made, or encouraged, the run discussed the run beforehand on social or private communication?

[Hards Alumni]

Is there any evidence that the VC folks who made, or encouraged, the run discussed the run beforehand on social or private communication?

That is what has been reported, but I haven't seen the receipts...

But who would keep that sort of info around.

[dgies9156]

Is there any evidence that the VC folks who made, or encouraged, the run discussed the run beforehand on social or private communication?

If the VC folks actually did this and incited a run, they committed a federal crime.

I suspect it is covered by 18 U.S. Code § 1344

If it was an email, text or another social media platform, the feds will find it and well, it won't be pretty.

[jesmu84]

That is what has been reported, but I haven't seen the receipts...

But who would keep that sort of info around.

Does this count as receipts?

Venture capitalists and business owners described the early stages of the Silicon Valley run being led by private message boards or Slack channels, where entrepreneurs were encouraged to withdraw their funds.

Silicon Valley Bank also was unique in being almost entirely exposed to one community — the tech industry, venture capital and startups. When this close-knit community of depositors talked to one another — using digital channels to do so quickly — the bank likely became more vulnerable to rumors and a run.

https://apnews.com/article/silicon-valley-bank-bank-run-twitter-fdic-fdbfc08ed00fcbdb9d83897b1b9f42ae

[MUBurrow]

If the VC folks actually did this and incited a run, they committed a federal crime.

I suspect it is covered by 18 U.S. Code § 1344

If it was an email, text or another social media platform, the feds will find it and well, it won't be pretty.

Excuse my ignorance, but what about private discusssions fearing a run and encouraging withdrawals constitutes fraud or false representations?