The postmortems are well underway now, and already some investing lessons from Silicon Valley Bank’s (SVB) stunning collapse are emerging. And there’s one that stands out above the others for me: I just don’t get how SVB’s highly clustered customer base (with so many clients hailing from the same industry) managed to go so unnoticed.
Of course, hindsight is 20/20, but it’s always important to assess customer concentration when analyzing investment risk. In fact, if, like me, you’re a practitioner of the quality style of investing (basically, buying stable, predictable, and profitable growth firms), you’ll know that a study of supplier and customer concentration is right up there at the top of the checklist. You’ll also know that the more diversified, the better on both counts. No one want
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With all this volatility, you may want to write that useful old adage down.
These spreads have widened, foreshadowing volatile days ahead.
When bond volatility is this hot, compared to stocks volatility, it’s a warning sign.