This is Not Another 2008 Financial Meltdown

Over the past few days, the global markets were shocked by the quick collapse of three banks: SVB of California, Signature Bank of New York, and Credit Suisse of Switzerland.

The good news is that this is not another “2008 financial meltdown”. Also, we don’t have any direct holdings of these companies in our portfolios. SVB and Signature Bank are regional banks with specialized businesses. They are not mainstream big banks. They are overexposed to the venture capital and cryptocurrency sectors that contributed to their demise. The rise of interest rates has also exposed their weaknesses.

The other good news is that Canadian chartered banks don’t have the same risk exposure. Although there may be continued volatility in the banking sector, the Canadian banks are still good long-term holdings.

Although Credit Suisse is a major bank, it has had financial trouble for the last few years. The situation is unique and does not supply to our holdings.

The mutual funds in my portfolios do not have any significant holdings in the three banks. We may not even have any exposure to them.

We are near the end of the business cycle and about to start a new one. The market is being reset and weak companies will be exposed. The current market correction is a part of it.

Again, the focus is to build portfolios of good quality businesses that will participate in the economic growth of the next business cycle. Stay the course.

Please feel free to call me if you have any concerns.

This e-newsletter has been prepared by Francis Cheng and expresses the opinions of the author and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. This newsletter is intended for distribution only in those jurisdictions where RJL and the author are registered. This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same privacy policy which Raymond James Ltd adheres to. Securities-related products and services are offered through Raymond James Ltd., member-Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member-Canadian Investor Protection Fund.