patrick.net

And you know, there's probably some big opportunity in this instability, but what is it? Gold?

Or maybe people really can run a positive carry thing, where they borrow at 2% and get a guaranteed 4% from government bonds and such.

Patrick says

Beware of gift tax on anything over $10K. Used to be $10K anyway. The giver has to pay the tax just to give the money away, iirc.

It's $16k now. There are ways around it too. My mom can gift $16k to anyone and they gift it to us. My mom sends my wife $16k and me $16k AND then to 10 of my buddies who proceed to gift me the money to my wife or I. That's $192k tax free. Nothing illegal. Literally have to reporting, nothing. You just have to trust your buddies to give you the cash/check. If you have 100 buddies it's $1.6M. No tax implications for anybody.

She doesn't need the money and it simplifies estate planning unwinding the money. It also doesn't count toward the $12M estate tax limit.

Patrick says

And you know, there's probably some big opportunity in this instability, but what is it? Gold?

Or maybe people really can run a positive carry thing, where they borrow at 2% and get a guaranteed 4% from government bonds and such.

I know real estate. I don't know markets as in stocks, metals and shit like that. I have my money in funds and so does the wife, but we're very much set and forget at our age. Maybe in a decade we'll start caring. When we do watch it, it generally has increased above our additions if that makes sense. Add $5k to $100k and a month later it's $106k. Simplified as an example but I think that should make sense. As long as it's doing that I don't care. Money isn't much of a concern for us.

My wife's 401k is large. Her employer is okay with borrowing against it. Reduces our income paying it back weekly, but we could borrow $200k on that tomorrow.

Regardless of my bitchy real estate comments lately, because I'm right.... I'm in a very good position to suck up properties IF there's a crash. Not happening in my market and I like to be hands on, so no management company for properties 1k miles away. I know RE investors do it, but I couldn't remotely. USVI vacation rental would be one option though because I can write off the travel to go there. He changes his damn user name but the guy with the condo? in Hawaii that recently move to Texas. Vacation and reducing taxable income with travel to "check" on the property.

WookieMan says

I have my money in funds and so does the wife

@WookieMan One clear lesson I learned from working at Schwab for 5 years was to never put money in any mutual fund, except perhaps an index fund with 0.1% annual fees.

Almost all mutual funds underperform the market substantially because they are skimming fees and buying bad stocks with your money because someone is bribing them to, and then deliberately obscuring what they do. Most employers deliberately trap your 401k in high-fee mutual funds because of various backroom deals like that. They almost never offer you the chance to buy index funds or individual stocks.

You could literally throw 20 darts at the stock pages (if they even exist anymore), buy those 20 stocks, and outperform 95% of mutual funds.

Another way to look at it: if they're quietly skimming 1% off of the 5% your investments are earning, that means they're taking 20% of your earnings. And for doing nothing useful.

Patrick says

WookieMan says

I have my money in funds and so does the wife

WookieMan One clear lesson I learned from working at Schwab for 5 years was to never put money in any mutual fund, except perhaps an index fund with 0.1% annual fees.

Almost all mutual funds underperform the market substantially because they are skimming fees and buying bad stocks with your money because someone is bribing them to. Most employers deliberately trap your 401k in high-fee mutual funds because of various backroom deals like that. They almost never offer you the chance to buy index funds or individual stocks.

You could literally throw 20 darts at the stock pages (if they even exist anymore), buy those 20 stocks, and outperform 95% of mutual funds.

Another way to look at it: if they're quietly skimming 1% off of the 5% your investments are earning, that means they're taking 20% o...

I hear ya. Money isn't much of an issue though. We're great on our own without any help, but I have 2 extremely wealthy uncles. I don't expect 0.1¢ from them, but we'll be well off either way. I'm semi retired if I'm being honest at 39. Nothing handed to us either. I was breadwinner with a flexible job and then the wife's career blew up in a good way. Like huge.

I do what would be shitty jobs to most but I like it after 15 years in real estate dealing with shit people. 1 minute commute. No boss really. No dealing with people. I'm an introvert so it's perfect. Covers the mortgage payment. Wife's money goes to savings basically. Probably could be better with the money, I might get back into investment properties. Warehouse style though. That's where my mom got her money recently from my dad's investment.

We're very frugal. I know I talk about travel a lot but you've got to figure out the game. We don't actually spend that much on it. I'm a fortunate man to be honest. I sometimes shoot myself in the foot, but I'm getting better. 25 years with my wife, so I'm doing something right (not marriage years). I like investment tips but it's currently not broken, so I'm not going to try and reinvent the wheel. It's a charitable gift to the investment managers... lol. They have families too.

I'm not sure the seriousness or magnitude of the current bust is going to come remotely close to the dot com bust back in 2000.

There were almost countless companies ranging from Garden.com to Pets.com that did not produce a profit and spent a lot of cash. A lot were ecommerce companies with some surviving like Ebay and Amazon.

I wonder what will be the industry types failing this type other than crypto currency companies.

Maybe it will be Artificial Intelligence (AI) companies and green technology companies that fail in large numbers during this bust.

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NuttBoxer says

Oh yeah, and to once again blow away the bullshit about everyone being insured, read the article about how some depositors will have to pray dividend sales will someday return their deposits to them.

From what I've read of WolfStreet.com, the worst case is that uninsured assets lose about 15% in value after Silicon Valley Bank is liquidated.

Silicon Valley Bank invested in long term bonds and lost a lot of value when interest rates increased. They should have bought no more than intermediate term like 2 and 3 year Treasury notes.

Vanguard Total Bond Market Index Fund ETF (ticker: BND) has lost about 20% from its peak value set in August 2020. I expect bond funds like BND to recover when rates hold steady. I'm not selling BND as rates will go down within the next 2 to 3 years.

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I've read reports that both Peter Theil and JP Morgan were shit talking SVB in the weeks/ days leading up to its' bank run. Seems like if there is any evidence of a collusion to bring down SVB one of our three letter agencies would be investigating. Yeah right.

This will never get fixed until regulations change to limit the leverage that these 'banks' can underwrite. I remember it was 40:1 in 2007 before you start including derivatives.

In other news, I heard a podcast on Housing wire this week and thought they said that Fannie Mae is considering letting realtors do appraisals - "to speed up the process and improve equity".

ad says

NuttBoxer says

Oh yeah, and to once again blow away the bullshit about everyone being insured, read the article about how some depositors will have to pray dividend sales will someday return their deposits to them.

From what I've read of WolfStreet.com, the worst case is that uninsured assets lose about 15% in value after Silicon Valley Bank is liquidated.

Silicon Valley Bank invested in long term bonds and lost a lot of value when interest rates increased. They should have bought no more than intermediate term like 2 and 3 year Treasury notes.

Vanguard Total Bond Market Index Fund ETF (ticker: BND) has lost about 20% from its peak value set in August 2020. I expect bond funds like BND to recover when rates hold steady. I'm not selling BND as rates will go down within the next 2 to 3 years.

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Correct, this is a drop in a bucket compared to 2008. However it sucks for those banking with them, incl. startups which may have loan/cap raise money tied up and is a warning sign. They mainly got screwed by their poor bond purchases / interest rate decisions.

Insiders (like Nancy Pelosi) have just a slight advantage over the rest of us.

Silicon Valley Bank CEO Sold $3.6M in Stock Before Collapse, Mysteriously out as Fed Reserve Board Member
https://redstate.com/bobhoge/2023/03/11/silicon-valley-bank-ceo-sold-3-6m-in-stock-before-collapse-mysteriously-out-as-fed-reserve-board-member-n714913

Pretty soon the public will learn the term 'bail-in' and what has been lurking like Pennywise in the Dodd-Frank Act.
I don't imagine it was an accident that they opened the legal door to using OUR MONEY to 'recapitalize' the 'next time'.
They did little to prevent their being a 'next time' they just assured that the Muppets would pay going forward.

"Bail-ins work a little differently, providing immediate relief. Banks use money from their unsecured creditors, including depositors and bondholders, to restructure their capital to stay afloat. Put simply, they can convert their debt into equity to increase their capital requirements."

Tucker Has Expert on Regarding the Collapse of Silicon Valley Bank and it Doesn't Look Good

"We are on the brink of a 2008 style financial crisis ..."

https://rumble.com/v2clad2-tucker-has-expert-on-regarding-the-collapse-of-silicon-valley-bank-and-it-d.html

Fasten your seatbelts ... this could get really ugly ... and fast.

I'm still amazed that people keep their money in the bank.
You are lending your capital to a bank for practically nothing.
Banks are greedy; they want to invest your capital and make a bundle on the difference.
Evidently they sometimes lack the ability to succeed.

RayAmerica says

Tucker Has Expert on Regarding the Collapse of Silicon Valley Bank and it Doesn't Look Good

"We are on the brink of a 2008 style financial crisis ..."

https://rumble.com/v2clad2-tucker-has-expert-on-regarding-the-collapse-of-silicon-valley-bank-and-it-d.html

Fasten your seatbelts ... this could get really ugly ... and fast.

Let me guess her company is shorting. I think it's not good of Tucker, who usually always says we don't know and can only speculate until we know more, to imply calamity or contagion with zero evidence so far. While it is possible I'm betting against contagion. This is nothing compared to the overleveraged, sold and packaged umpteenth type MBS that every bank was engaging in in 2008. There will be some startups going bust which would likely have run out of funds sooner or later in this environment anyways. We'll see

Is SVB being deflated to expose the Globalist depositors? One wonders.

"The sky is falling!"
"It's game over man, we're fucked!"

Apparently SVB had the fastest bank run in history, going negative in under an hour. This is something I'm not sure many people consider about a digital world. A company I worked at a few years ago mentioned how fast popular songs traveled around the world. The first one may have been that Fox song, and the second was Gangum Style. The time it took for the second to catch on was exponentially faster, and that was years ago now.

When shit goes bad it will be within hours, not days.

stfu says

I've read reports that both Peter Theil and JP Morgan were shit talking SVB in the weeks/ days leading up to its' bank run.

We all know Morgan Stanley didn't go down by accident, neither did Washington Mutual.

Ceffer says

Is SVB being deflated to expose the Globalist depositors? One wonders.

clambo says

"The sky is falling!"
"It's game over man, we're fucked!"

They just made a lot of shit loans to startups aside from their failed bond plays, which are always dandy as long as we are in a fed supported low interest rate environment. It's been know for a while they weren't doing that great.

I heard on Buck Sexton that SVB chopped up all their commercial loans and sold them off in pieces to other institutions.

I know you really want to deny this is bad, but your outlook is too narrow. Both articles make it clear the underlying issue is not unique to SVB. Further the interest rates are rising because they have to, not because the Fed is raising them. Fed was attempting to suppress them, that created rampant inflation, now they are attempting to suppress the inflation. As they failed at the first, they will fail at the second. Local banks have routinely been short on cash the past few years, as I personally noted here several times. Business's are tightening belts, and even the ones hiring the recruiters are nervous. There are issues with food supply(some real, some false flags), getting parts in EVERY industry, getting products on store shelves. Record homeless, record unemployment(don't bullshit me with government numbers), and RECORD DEBT AT ALL LEVELS.

This will not end will, this was never going to end well. They won't roll out the CDBC slave currency in time to prevent the dollar collapse. You put your head in the sand, the only person who suffers is you, and those you are responsible for.

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

NuttBoxer says

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

Buying opportunity?

If I where a realtor I'd tell you it's a great time to buy! Unless you're holding, then it's a great time to sell! Brokers and real estate agents have a lot in common...

HeadSet says

NuttBoxer says

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

Buying opportunity?

HeadSet says

NuttBoxer says

The market halted trading on three bank stocks Friday. Monday could be a bloodbath.

Buying opportunity?

If there is no contagion there could be a strong rebound rally by end of week. Even intra day Fruday there was a larger rebound.

The AP is running stories telling us not to worry about SVB. THAT in itself should be cause for concern. Then there's this:

SVB International Fallout: UK and EU Lenders Lose £30 Billion Overnight as ‘Panic’ Spreads
https://www.breitbart.com/europe/2023/03/11/svb-international-fallout-uk-and-european-lenders-lose-30-billion-overnight-as-panic-spreads/

This may not be the card that brings down the entire house, but eventually, this shaky global economic house is going to collapse. It's at that point that the elite planners of the world will roll out their Great Reset, whereby, 'you'll own nothing and be happy.' After the kill-off from the 'vaccine,' I wonder how many of us will be left?

stfu says

Fannie Mae is considering letting realtors do appraisals

Candidate for worst idea ever.

WookieMan says

I'm in a very good position to suck up properties IF there's a crash. Not happening in my market and I like to be hands on, so no management company for properties 1k miles away. I know RE investors do it, but I couldn't remotely. USVI vacation rental would be one option though because I can write off the travel to go there. He changes his damn user name but the guy with the condo? in Hawaii that recently move to Texas. Vacation and reducing taxable income with travel to "check" on the property.

This is the name I've mainly used for the past 13 years. I've changed it temporarily a few times during what seemed to be peak clown world or to effe with religious nuts. Same picture for nearly that time as well. I picked it because I'd always figured I wasn't going to stay in CA and now that I'm back in TX I should probably change it to passed through or something.

In any event, I managed SFHs in TX from CA for 10 years, but now I'm only several miles away. Just need to get a good property manager. It's been 6 years since I've been doing it entirely on my own for Hawaii. If you decide to do it know that you can only spend 14 days/year at your vacation rental or your 100% deductions drop to 50%. Also, I'm not sure the virgin islands has the kind of support you'd need like I get in HI. The cleaning company I use is top-notch and priced fairly and came from the hotel industry there. You need reliable resources like that or you wind up fucking over guests and getting bad reviews. Also HI gets LOTS of visitors so I'm able to keep it fully booked 3-4 months out year around. I charge nightly rates, cleaning and taxes. Of that I keep only about 1/3rd after all is said and done.

Unrelated but related to this thread: The company I work for had $ in SVB. Apparently about 50M and ~10% of what we have. I'm concerned because we are not profitable. It's a disruptive biotechnology so we've been focused on expansion and taking over markets (quite successfully) instead of profit. We did switch to profit seeking 3 quarters ago and are doing a great job each quarter. However it'll still be 2-3 years before we make it and so I'm definitely concerned I'll be laid off over this.

Lots of Liberals clamoring for the government to backstop the deposits or it'll be a catastrophe for the start-ups.

Funny that they let the oil patch kids basically go to hell during Covid.

I think that the government will follow the law with regards to deposit insurance. No bailouts or bail-ins. If they try to sell the loan book off quick, they ain't gonna get anywhere what it's listed for on the books. It is just not a good time to loan start-ups coin.

Here's what the lead exec on Risk Management was most focused on at SVB

Jay Ersapah
Not just another pretty white girl she's:
*Queer
*Person of Color
*1st Generation Immigrant
*Working Class Background

Had to hire her (xir?) for winning intersectional bingo. Unfortunately she gave priority to "woke" issues and just threw all the money into long-term bonds so it was less work to manage.

https://www.youtube.com/watch?v=eqgXGMAS__M

AmericanKulak says

Here's what the lead exec on Risk Management was most focused on at SVB

yep, i read about her at https://www.dailymail.co.uk/news/article-11848705/Woke-head-risk-assessment-Silicon-Valley-Bank-accused-prioritizing-diversity-issues.html

this scares me as i wonder if the entire USA from pentagon to hospitals to innovation centers are beyond repair with this dysfunctional culture and the chicoms are just waiting for (and aiding) the USA to implode

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Silicon Valley Bank is a Poster Child for the region.

I spent my four decades career in the trenches of tech, in bleeding edge technology. I grew up in the region that became known as "Silicon Valley".
To my thinking, folks like richwicks and Patrick himself are newcomers. There's a slew of patents with my name on them, about a third of those as lead inventor. I am retired now, but members of my nuclear family are employed at some of those household name outfits, including in (senior) leadership positions. I share those personal tidbits not to boast, but for perspective for my next remark:

Silicon Valley Bank is a Poster Child for the region, and for finance about our region. I've been skeptical for decades about the hooplah. Chickens coming home to roost and all that. It's the reason, for my whole adult life, I only use "Silicon Valley" as a Pejorative.

IMO there's also a 50% chance that somebody will buy it and guarantee/return most funds, with the help of regulators/taxpayers. You know how this works by now ;)

RayAmerica says

It's at that point that the elite planners of the world will roll out their Great Reset, whereby, 'you'll own nothing and be happy.' After the kill-off from the 'vaccine,' I wonder how many of us will be left?

Except that they aren't anywhere close to ready, and cannot stop the train wreck. Their arrogance will be their undoing.

Agree that another bankster bailout would be a travesty.

BayArea says

Agree that another bankster bailout would be a travesty.

It depends on what you mean by bankster bailout. Do you consider seizure by the state and liquidation by FDIC as a bailout travesty?

B.A.C.A.H. says

BayArea says

Agree that another bankster bailout would be a travesty.

It depends on what you mean by bankster bailout. Do you consider seizure by the state and liquidation by FDIC as a bailout travesty?

No, this would be the system working as designed.