The Silicon Valley Bank Collapse: What You Need to Know (and How to Stay Safe)

by | Mar 14, 2023

Unless you’ve been living on a deserted island with no internet for several days, you’ve probably heard about the historic negative catalyst rippling through the entire market.

I’m talking about the rapid collapse of SVB Financial Group (NASDAQ: SIVB), a regional bank from Silicon Valley that holds deposits from some of the world’s biggest tech companies.

Many traders had never heard of SVB before last week, but they’re familiar with it now … for all the wrong reasons.

WARNING: SVB’s downfall is the second-largest bank failure in the history of the U.S.!

And what seemed like an isolated incident is now proving itself to be a more widespread problem…

On Monday, First Republic Bank (NYSE: FRC) was down as much as 73% as the fear of further regional bank collapses radiated throughout the market.

This shows how a minor contagion can spread into a massive financial pandemic in the blink of an eye, and why you must be prepared for anything the market throws at you…

I know a lot of traders are concerned about what this means for their game plan. But I think some people are looking at this the wrong way…

Today, we’ll go over exactly what happened to SVB, what it means for the rest of the stock market, and why now is actually an excellent time to be a trader.

Keep reading and I’ll show you…

A Timeline of Events

Before we break down what it means for the overall markets, let’s run down a brief timeline of what’s happened so far in the SVB collapse…

Tuesday, March 7: A cash crunch in tech startups leads to massive withdrawals from SVB, creating a cash crunch of its own for the bank…

Wednesday, March 8: The news of SVB’s troubles begins to spread, causing the stock to crater in after-hours trading…

Thursday, March 9: SVB stock opens dramatically lower, losing 65% of its market value in a single day…

Friday, March 10: SVB is on the brink of collapse due to withdrawals and selling pressure, leading regulators to shut the bank down…

Sunday, March 12: The Fed announced it would provide $25 billion in backstop support to banks facing solvency issues…

How I’m Staying Safe

I know a lot of students are concerned about what all of this means for the overall market.

But more than anything, the regional banking crisis reminds me of why I’m happy to be a trader as opposed to an investor.

As a trader, you should be looking for volatility … not fearing it. Additionally, you should be relatively indifferent about the direction of stocks.

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You’re searching for big moves in either direction

Where long-term investors are kind of forced to be bullish as they root for their positions to gain value … traders are free to profit off of either side of a stock’s move.

I’m incredibly grateful to be a trader right now. I don’t envy investors who are stressing over the future of their long-term positions during such a cataclysmic moment for banks. 

But that doesn’t mean I’m aggressively trading. On the contrary, I’m sitting on the sidelines and gathering information for now…

Why? Because I know my circle of competence…

I’m not a macroeconomist or a banking expert. And I don’t usually trade stocks in the financial services sector.

Though it remains to be seen how big of an effect SVB’s collapse has on the total stock market, it’s not a big part of my game plan … yet.

We may be heading for a full-blown market crash, but I could also see a big bounce happening first.

Regardless, with the consumer price index (CPI) report printing today, I don’t wanna put any pre-emptive trades on…

Now is the time to harness one of the most important virtues of a great trader — patience!

Let’s see what the Fed does first, then assess how it relates to SVB’s collapse and the direction of the overall market.

Final Thoughts

The SVB collapse is one of the biggest stories in modern stock market history.

Even if it doesn’t affect the stocks you trade, you need to be aware of exactly what’s happening in regional banking right now.

This catalyst will undoubtedly have wide-ranging implications on the market. But it’s too early to tell how the whole story will play out.

Meet Mark:

Mark Croock is a former accountant who after studying under Millionaire Trader Tim Sykes turned his small account into $4.11 million in trading profits by applying Tim’s strategies to options trading.

He started Evolved Trader to pay it forward and help other traders learn how to leverage options


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