Knowing Your Limits and the Personal Portfolio
When it's best to walk away.
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The Temptation of St. Hilarion, Dominique Papety, 1843-1844, oil on canvas
I’ve spent much of the past week reflecting on the SVB Financial collapse and the takeaways from the whole situation and how to explain it here.
I have nothing.
I could try to synthesize it and break down how this whole situation went down. If I were brutally honest with myself, it would be doing a disservice to both you and the situation.
I’ll admit financials and banks are not my strong suit. It isn’t a topic to which I have paid much attention prior to the past week. Were I to retell the story here, it would be a curation of others’ stories and opinions.
To me, this isn’t adding value to the conversation. It’s chasing attention that other, more deserving content out there should receive. Probably the most effective thing I could do to improve your understanding of the SVB collapse is to refer you to some of the great work I have read and listened to over the past week.
There is a perverse incentive in financial writing to have an opinion on what is in the financial zeitgeist, regardless of the opinion or one’s familiarity with the topic. The currency of financial writing is clicks, likes, and subscribes. Electing to not produce content on the topic du jour is choosing to fish in a small stream instead of a stocked pond.
Investors also feel the pressure to have an opinion on these topics, but with greater stakes. Being overwhelmed with content on a particular subject can induce us into taking an opinion or, worse, a financial stake. The gravitational pull towards topical or trending ideas is undeniable.
There are dozens of social media personalities and newsletter publishers out there discussing their recent acquisition of regional banks and other businesses that were swept up in the SVB panic. I hope that trade works out for them, but I do fear many of their readers will follow suit out of fear of being left behind (or just wanting to be part of the “in” crowd that profited from whatever this banking crisis ultimately becomes).
Being able to walk away from a situation of which you don’t have a firm grasp is a greatly undervalued trait. That is especially true today as we are more and more exposed to what everyone else is doing and how it is working out for them.
Like everyone else, I hope to come out on the other side of this banking fiasco with a better knowledge of the banking sector. Perhaps when I have spent enough time studying the sector I will form my own opinions, but I’m not there yet.
And now, on to the personal portfolio.