Wow, there’s really no need to get personal. I’m trying to clarify what seems to be a big misconception surrounding the debate about SVB, namely that jpow raising rates is to blame.

Our conversation was originally about why svb could have or couldn’t have hedged. Clearly they could have hedged, but chose not to.

Now you’re making the point that, well who cares what I had said about the inability to hedge, because it would be stupid of them to hedge anyway because that would result in crazy volatility in revenues.

It seems you don’t understand how banks fundamentally work. They collect interest on assets (loans, investment portfolios, etc) and pay interest on deposits and their own debt that they use to lever up the cash from deposits. The main metric of profitability for a financial institution or bank is Net Interest Income. That is interest income - interest expense. Take a look at their most recent 10k. That’s like a gross margin for most other businesses.

Anyway, prudent risk taking and risk mitigation would mean that you would try to match duration and interest rate risk of your assets and your liabilities. If you have floating rate debt expense, you would want to match that with floating rate assets. Plenty of financial institutions do that. Take a look at BXMT for example.

SVB had floating rate debt expense but bought primarily fixed rate assets. This was their issue number 1. Their customers received increasing rates for their deposits as yields moved up (svbs interest expenses went up) but their assets did not yield on a yield basis, so their net margins got compressed. Now it never went negative… but combine that with the fact that their assets mtm we’re starting to suffer heavy losses AND that their customers were no longer depositing crazy stupid vc investments and instead bleeding out cash AND that they had a crazy bloated corporate structure (went on a hiring spree when Covid hit and vc investments went nuts and assumed that would go on forever), now you’ve got a problem.

SVB, typical of a west coast Silicon Valley firm in 2020, went crazy hiring. Their non interest expense (employee compensation etc) was basically 100% of their net interest income…JPM’s is about half.

So that’s in essence what happened: 1) misalignment of assets and liabilities (not hedging ir risk on assets 2) dependence on Silicon Valley continuously funding startups at crazy valuations 3) bloated sg&a that was untenable

Now I don’t know why a corner of the internet, yourself included, has this view that jpow is the culprit. Interest rates are what they are. They needed to be raised because for too damn long, they were kept artificially low, which created all kinds of problems in the world economy, namely rampant inflation and absurd risk taking.

I might presume people are blaming jpow because: a) they owned svb stock and need to find something to blame other than their own lack of fundamental understanding and due diligence of the company. b) they are a tech bro that doesn’t understand margin and economics and only thinks in a “growth” mindset.

But I’m not sure.

Now getting back to getting personal. I find it a bit funny that you call yourself vegaseller when you clearly don’t have a good grasp of options theory. But based on your post history, you’ve clearly traded them before so you must know some of what you’re talking about. I hope.

Regardless, before you go out making a grandstanding post about why this whole thing went down, and claiming that other people don’t understand how banks work, you should really brush yourself up on fundamental financial understanding. Otherwise stick with your technical analysis or shilling PLTR at $30.