Say you are the CTO or financial technologist at SVB. You have a high influx of cash coming in 2020/2021.. Because you have seen the ups and downs of 2000/2008 era, you can see that this is a bubble. The stock market is too risky to invest.. You also know the interest rate is going up. So sitting on cash is the worst thing to do. Somehow the startups are not asking you for money. The VC’s have enough money to fund everything that comes their way. Only option left is the bond. That is a more predictable way of increasing money. Biden is also pumping money that govt projects don’t need as much.. So not much short term bonds are available and you are forced to get some long term bonds. What would you do ? #startup #svb
I mean he should have asked blinders, right.
Short term bonds, ladder
Stratify investment over short term and long term bonds instead of going all in on long term mbs…
You are or you were? They went under already
Talk to my Chief Investment Officer and Chief Risk Offer
Where buffet parking his cash?
Bonds are OK as long as you hedge for interest rate rises, which SVB management didn't.
It’s too difficult and expensive to hedge HTM long bonds.
Too expensive to hedge doesn’t mean “do it anyhow” it means “ you can’t do it because it doesn’t pay after risk premium, dummy”
Plot twist
Does he do it purposely? Lehman brothers?
Maybe crashing markets is his sexual kink
HODL
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