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Poor move by the CEO. It's like he wanted to be honest with everyone but that wasn't a strong signal. Also out most of the banks - you would expect that the c

Poor move by the CEO. It's like he wanted to be honest with everyone but that wasn't a strong signal. Also out most of the banks - you would expect that the clients of SVB are a little more sophisticated than your retail bank demographic being start-up companies and all (big assumption).

vineyardmike 4y ago
Conversely, they’re very sensitive to having their capital liquid compared to bigger companies that may have multiple banking relationships or access to credit markets in case of short term issues.
tyre 4y ago
They’re a public company with known exposure to startups. If he lies, that’s securities fraud and he could go to prison. Is that worth it?
- b112 4y ago
  "no comment"
  - batiudrami 4y ago
    No comment is almost worse if someone is asking about your bank’s liquidity.
    - smugma 4y ago
      No comment won’t land you in jail.
      - batiudrami 4y ago
        Sure but it’s almost certainly the end of your bank. So I guess you tread somewhere in the middle, like he did.
fullsend 4y ago
In the immortal words of Andrew Lahde who closed his hedge fund up 800% in 2008, “I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.” Assuming these people have any level of sophistication is what gets us into these messes. It’s good to remember they are betting billions of dollars based on nothing but fomo and don’t know anything special at all.
- hnthrowaway0315 4y ago
  The secret part is: they (yale guys) still bag big money regardless.
  - headsoup 4y ago
    I'd say rather they don't miss losing a big bag or two so much as others do...
deleted 4y ago
[deleted]
melvinmelih 4y ago
> you would expect that the clients of SVB are a little more sophisticated than your retail bank demographic being start-up companies and all Sometimes you can be too smart for your own good: in this case the CEO might have assumed that everyone knows that all banks inherently carry a risk in case of a bank run, but all the market hears is the word “risk” and panics correspondingly.
- super256 4y ago
  Im pretty sure this can also be an engineered trade for smart money. I imagine it like this: 1. Place some money in bank. 2. Wait till bank bought bonds, treasuries and all that jazz. 3. Short the banks stock. 4. Withdraw huge amounts of money and cause liquidity crunch. 5. As the bank needs to keep its capital ratio above 5%, it will close positions at a loss, causing a death spiral (the bank run. As more people want to secure what’s left, the bank needs to unwind more positions at a loss. Which will cause even more people wanting to withdraw, which results in even more selling of the bank. 6. Eventually the bank becomes insolvent. 7. Buy stock back. There might be more variables to it, such as the price of the treasuries itself (you might want to wait for a rate hike, inflation, credit rating change or whatever before you make the bank sell), but generally this is how imagine such a trade.

vineyardmike 4y ago

Conversely, they’re very sensitive to having their capital liquid compared to bigger companies that may have multiple banking relationships or access to credit markets in case of short term issues.

tyre 4y ago

They’re a public company with known exposure to startups. If he lies, that’s securities fraud and he could go to prison. Is that worth it?

b112 4y ago
"no comment"
- batiudrami 4y ago
  No comment is almost worse if someone is asking about your bank’s liquidity.
  - smugma 4y ago
    No comment won’t land you in jail.
    - batiudrami 4y ago
      Sure but it’s almost certainly the end of your bank. So I guess you tread somewhere in the middle, like he did.

fullsend 4y ago

In the immortal words of Andrew Lahde who closed his hedge fund up 800% in 2008, “I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.” Assuming these people have any level of sophistication is what gets us into these messes. It’s good to remember they are betting billions of dollars based on nothing but fomo and don’t know anything special at all.

hnthrowaway0315 4y ago
The secret part is: they (yale guys) still bag big money regardless.
- headsoup 4y ago
  I'd say rather they don't miss losing a big bag or two so much as others do...

deleted 4y ago

[deleted]

melvinmelih 4y ago

> you would expect that the clients of SVB are a little more sophisticated than your retail bank demographic being start-up companies and all Sometimes you can be too smart for your own good: in this case the CEO might have assumed that everyone knows that all banks inherently carry a risk in case of a bank run, but all the market hears is the word “risk” and panics correspondingly.

super256 4y ago
Im pretty sure this can also be an engineered trade for smart money. I imagine it like this: 1. Place some money in bank. 2. Wait till bank bought bonds, treasuries and all that jazz. 3. Short the banks stock. 4. Withdraw huge amounts of money and cause liquidity crunch. 5. As the bank needs to keep its capital ratio above 5%, it will close positions at a loss, causing a death spiral (the bank run. As more people want to secure what’s left, the bank needs to unwind more positions at a loss. Which will cause even more people wanting to withdraw, which results in even more selling of the bank. 6. Eventually the bank becomes insolvent. 7. Buy stock back. There might be more variables to it, such as the price of the treasuries itself (you might want to wait for a rate hike, inflation, credit rating change or whatever before you make the bank sell), but generally this is how imagine such a trade.