Meditation On Uncertainty
I’m sure you’ve heard the news by now: Silicon Valley bank (the #16 largest U.S. bank with $212B in assets) has collapsed. This bank has been a major player in servicing startups for decades, and its collapse has put the entire startup/tech industry at risk. There is also a risk of contagion, which could have far-reaching consequences.
I don’t mean to be an alarmist, we have enough of that at the moment. What I’m asking you, though, is to pay close attention to how things evolve. The talking heads, the influencers… everyone is talking about the dire consequences, and rightly so–this is really concerning! But it’s not a moment to panic. As traders, our job is to step back from the noise and assess things objectively and strategically, rather than emotionally.
As always, probabilistic thinking is your best friend. We’re all dealing with known and unknown variables here. Always issue caveats and acknowledge uncertainty through your reasoning and behavior as a trader. Such humility suggests understanding and thoughtfulness. Be cautious of those who speak in absolutes because everything has caveats, exceptions, and edge cases along a spectrum of possibilities.
Coming back to this SVB news, this is going to be an eventful week in the market. If you plan on trading, do it dispassionately, keep emotions out of it, and always manage your risk. Place sensible stop-losses that account for the ramp-up in volatility, and stay focused on your plan and process.
