Fisher Investments’ Ken Fisher Discusses Contagion Fears Following Silicon Valley Bank’s Collapse

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses Silicon Valley Bank’s (SVB) collapse and why he doesn’t think its effects will spread. Ken believes the SVB failure was unique and misunderstood. He says investor commentary centers on the negative effect rising interest rates had on SVB’s debt holdings, which generated losses when the bank had to sell them to cover withdrawal requests. While true, Ken thinks the real problem was the high volume of withdrawal requests caused by a narrow depositor base-mostly concentrated in the venture capital community-which panicked simultaneously. Ken says most banks have a diversified depositor base and aren’t likely to face this problem.
Ken also believes media headlines are misleading by calling SVB and Signature Bank’s collapse “the second- and third-worst bank failures in history”. While accurate when measured in today’s dollars, Ken thinks it’s more important to compare the size of these banks relative to the size of the US economy. According to Ken, the US has seen much bigger bank failures relative to the size of its economy-notably, the Bank of the United States in 1931 and Continental Illinois in 1984.
Ken believes banks are healthier than investors appreciate, pointing to the effects of regulations following the 2008 financial crisis, which bolstered balance sheets. Ken acknowledges big banks are healthier than small banks-and that it’s possible more small banks fail-but says fears of systemic weakness in banking are likely overdone.
For more of Ken Fisher’s thoughts on the markets, visit us at www.fisherinvestments.com.
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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

[@renegade382]

Thank you, Mr. Fisher for a clear and concise report on the current state of the US banking system. You are always a voice of calm and reason in a turbulent market. Your legendary, expertise and decades of experience are very reassuring.

[@DrPeterLorenzo]

Thank you, Kenneth. Given your background, however, I would expect you to never confuse phenomenon and phenomena...

[@svendnelson]

Thank you for the balanced contextualization. It would be great to hear your take on the topic of 'De-Dollarization'.

[@darrenhere5856]

Loving Debunkery !! Thank you.

[@gmo709]

As you always say or I think you said this... "Scale the numbers.." I use that all the time when people look only at flat production stats for baseball players.

[@tomtaylor3523]

Thanks for the information.You're a very smart man.

[@stefantoth4839]

Now a topic about interest rates would be very interesting, since these events that are discussed happened. Thank you for interesting videos and your time!

[@mikesackmary]

These videos are extremely helpful

[@matteoguasco4941]

Thank you for sharing your wise analysis.

[@szczypiorek]

Thank you for that meritorical video

[@sandrofraiss7197]

Thank you !

[@joemc111]

Like Warren Buffett says, never bet against America. I was just a young man in October 1987, we had the radio on and I couldn’t get to a phone to call my broker. Good thing I didn’t.

[@alexgamble4718]

Must have been terrifying.

[@ogpigeon4431]

Great point !

[@ogpigeon4431]

Kudos to the courage you displayed in that moment. Not easy ! 😉

[@efibendor1]

I disagree that loans to deposits is useful because deposits are short term and fickle and loans are long term and hard to call upon. The available for sale relative to deposits is a better ratio. Measure this ratio you will see many many banks are under 15% which is low.

[@AmberDalton-rt4oq]

Ya see. The loans to deposit. The loans are way bigger than deposits made. And we have to pay those loans back when banks make the money out of thin air. No backing. But we have to pay it back with interest.

[@horacetso]

He missed a basic point. The problem is not so much this SVB event causing other banks to fail. The key issue is the failure of a sizeable bank, which doesn't need to be the largest, second, thrid, etc largest bank in the US, will make other banks to tighten lending. That will reduce credit creation in the economy, contract growth.

[@alexgamble4718]

True, but his point was around contagion and the hyperbole surrounding SVB. What your suggesting probabky will happen to, but thats not a bad thing in the context of high inflation.

[@BretSnyderMusic]

What do you make of the fear mongering that we're headed toward a major decline in the market, crashing as far as 40% this year? I watched your 2023 outlook video a few months ago, but do you have an update?

[@ogpigeon4431]

Just my opinion, but I think what’s going to keep a major pullback from occurring mostly is because EVERYONE in the markets expect it and therefore steps have already been taken to dramatically lower that eventuality. I think we underestimate the benefits of living in the Information age in that info spreads so quickly we can get ahead of incoming problems before it’s too late.

[@winfreebusinessgrowthadvis1483]

THIS IS ANOTHER REASON I HAVE 25% CASH; WE ARE IN A BULL MARKET. IT STARTED LAST YEAR, LATE.