Your portfolio was built with the knowledge of how banking crises historically affect markets.
When the news of the SVB (Silicon Valley Bank) collapse hit a week or so ago, it seemed unprecedented. The shockwave that went through the banking system left many wondering what fallout may arise. Subsequently, consolidation is occurring in the banking industry (Credit Suisse was acquired for pennies on the dollar by UBS over the past weekend). Meanwhile, the US Federal Reserve and international governments are taking various monetary actions, including providing additional liquidity, to shore up confidence for bank depositors.
Global stock and bond Markets are doing what markets do when significant shocks to the system occur. Current prices are fluctuating, sometimes rapidly, in the process of working through the news.
Times like this remind us that volatility is a normal course for markets. The chart below helps illustrate how global markets have endured banking crises and various disruptions throughout history. Over the long term, discipline and patience have been rewarded by ever-resilient markets:
*You cannot invest directly in an index. Past performance is not a guarantee of future performance. Banking crisis info from: http://go.efficientadvisors.com/e/91522/wiki-List-of-banking-crises/92ytql/1861061795?h=2flbjrq2vcc3CUDMhXJY2kx_O7Amlm7Eal9GpHD6WbM.
Always remember that it is impossible to predict with 100% accuracy how people, businesses, governments, and the ultimate pricing mechanism, markets will react to news and new information. One thing is clear, enduring short-term volatility is key to long-term success.
Disclosure:
The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.
