What Banking Crisis? US Stocks Gain 7.5% in the First Quarter of 2023
Only three weeks ago, investors trembled on the news that Silicon Valley Bank and Signature Bank had failed, while Credit Suisse, founded in 1856, was sold for pennies on the dollar to UBS.
Three weeks later, does anyone even remember? The S&P 500 is up 7.5% YTD, halfway to our year end target of +15%.
At noon on March 12th, we wrote Silicon Valley Bank is not Lehman Brothers, commenting specifically that no bank depositors had lost their savings in 70 years:
In principal, any bank deposit over $250K is not covered by FDIC insurance. In practice, when the FDIC take over a bank, the assets of the bank (deposits) are merged into a healthier bank. Depositors may not have access to their money for a week or two, but then financing operations resume as normal when the new bank takes over.
At 6 PM on the 12th, the Fed and FDIC announced that depositors would have access to the funds the next day.
We took a number of phone calls from concerned clients in the last three weeks, many of whom took our advice to ADD funds to their investment accounts - so far, so good!
Even better news for investors:
US inflation fell to 6% in March, still well over the 2% target, but the best report since inflation peaked at 9.1% June 2021
The Federal Reserve Board raised interest rates another 0.25% in March, indicated one more raise to come in May. This indication is in line with our expectation that the Fed would be done tightening by June 2023
US Jobs situation remains the best in decades
US stocks are STILL undervalued by 10% according to the Morningstar valuation model
David Edwards is president and wealth advisor with Heron Wealth, a $500 million registered investment advisor based in New York City working with 225 client families across the U.S. and around the world.
At time of publication, Edwards and/or his clients held positions Amazon, Apple and Google.