Weekend Reading: What Does the Demise of SVB Tell Us About Our Behavior During Market Shocks?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading SVB bank investor behavior lessons Weekend reading SVB bank investor behavior lessons
Weekend Reading

You’ve seen news headlines detailing the fallout of Silicon Valley Bank. However, amidst the panic, it’s also vital to zoom out and consider what tumultuous times can teach you, particularly when it comes to investment risk.


A few lessons learned include:

📌 Your time horizons contract: Despite having a long-term investment strategy, events like bank failures prompt you to focus solely on the immediate future. Don’t let uncomfortable feelings that are temporary trap you into making a decision that could do more harm than good.

📌 You feel you must act: When a surprising change happens in the markets, it may urge you to make a more drastic change to your portfolio, which could be the biggest risk of all.

📌 Uncertainty hasn’t increased: Markets aren’t “more uncertain” than they were before. They are consistently uncertain, regardless of what happens next.

📌 The most meaningful risks are the ones you don’t see coming: The experiences you’ve been through set the tone for your top investment concerns. However, often the biggest risks are what you don’t anticipate.

📌 Exciting stories overwhelm risk awareness: The more fear-inducing the news headline, the more blind we become to detail. As they say, “the higher the vix, the higher the clicks.”

You don’t know what will happen next, but you can control your response and behavior to unexpected events like these by being proactive. First, have a retirement strategy that is built to withstand the worst. Second, stick to that strategy through trying times.