BRIDGEPORT, W.Va. (WBOY) — After the failure of the Silicon Valley Bank, along with other banks, West Virginians may be wondering how collapses like these will affect them in the long run.
Luckily, West Virginia State Treasure, Riley Moore said in a press release on March 14, “I want our taxpayers to rest assured we did not have any funds or holdings invested in silicon valley bank or the two other high-profile bank failures, Silvergate and Signature Bank.” He added that WV banks will be largely unaffected.
However, 12 News spoke with Keith Dumas, owner and wealth manager at Peak Wealth Management, on the effect that these banks collapsing will have on investments overall. He said, “we have already been in a down market for the last year. We’ll continue to probably see the effects of our economy struggling today. This is just part of that that happens. The financial industry in particular will struggle just for time being. We will see some volatility there for sure, and that is where we’ll see the issues that we have currently.”
It was also said that it is common for people to move over to commodities and metals like gold and silver, because you can physically hold them, during times like these.
Securities offered through Parkland Securities, LLC member FINRA/SIPC. Advisory services offered through Sigma Planning Corporation, a registered investment advisor. Peak Wealth Management operates independent of Parkland Securities, LLC and SPC. 440 E. Main St., Bridgeport, WV 26330. (304) 848-8888.
Dumas mentioned that we do not have to fear, for this could be an opportunity to get investments at a discount. “As long as you don’t need the money in any – in the next ten years, as usually a general rule of thumb, that now’s a pretty good time to continue to buy and hold, and continue that strategy. Especially in your employee-sponsored plans, that’s where you’re going to have an opportunity over the long term to really gain from this opportunity, as opposed to being afraid of it.”
While discussing the topic at large, Dumas explained that ripple effects like this in the financial industry won’t be immediate and they will show up a couple of years down the road through regulation from congress and the Senate.
Furthermore, what happens after everything is over and done with, and new regulations have been set will change how banks deposit on demand. He added that this is more of a liquidity issue, meaning it’s a risk to a bank’s earnings and capital arising from its inability to timely meet obligations when they come due without incurring unacceptable losses. It is not related to insolvency, which is the inability to pay one’s debt.
Dumas said that only time will tell if these bank failures will be as bad as the 2007/2008 financial crisis. The dust has to first settle to be able to see how it will affect the overall economy and market.
He added that we have not seen a market downturn or economic struggle for a long period of time, since that specific financial crisis. “People have really forgotten what it feels like to be in this bare market that we’re in and we just don’t know how long it’s going to last. We certainly hope it’s shorter than longer, but we’re already about 14 months into this market downturn, and we’re not exactly sure how long it’s going to last.”