#Financial Market

[prophet-one]

SVB bank failure

I comprehend the reason why SVB failed: its a classic bank run where the bank does not have the liquid assets to fund withdrawals. This the “other shoe dropping” wrt the rapid increase in interest rates.

what stands out to me are two questions: why do companies have that much cash in the bank? How did the financial markets in general fail?

The SVB failed because the financial markets are NOT working. The markets are not providing suitable securities for companies to park their excess cash. SVB was probably seen as a “safe” place to store cash. That assumption is obviously false. 

Question: why did the corporate depositors have so much money in cash accounts versus other securities?

Two months ago I was discussing cash management with my financial advisor. The key point he made about Bonds and funds that invest in bonds, is to use rolling maturity. The bond values will lag the market (especially with rapid changes in interest rates), but you wont lose principle. (BTW the change in bond values has to do with the liquidity price not the book value... if you hold bonds to maturity, then you dont lose value). So, back to the question about the depositors... when you have a billion plus of cash to invest you should be able to do something better than stash it in a low interest chequeing account. Something doesnt seem right about that.

Question: why do corporate depositors have so much cash on hand in the first place?

The financial markets “should” provide companies with cash “when and as” they need it through equity and bonds and loans. When a company like Roku has over a billion dollars sitting around “just in case they need it”, this is a clear sign that the financial markets are not working. Different sectors have different requirements for liquidity; but having 2 to 5 years of excess cash on hand is well beyond any reasonable requirement.

I completely understand that companies like the security blanket of having 2 or 3 or 10 years of cash sitting around. However, that is a total waste of shareholder resources, given that shareholders can make better investments with that cash. There is supposed to be a tax on capital to disincentivize hoarding... I guess that tax is not high enough.

When the regulators have time to get around to sifting through remains; I would like them to investigate these two questions: why are corporations not investing their excess cash appropriates? why do corporations have so much excess cash, why cant corporations raise the cash they need in an efficient manner? 

[unleashyourideas]

AI in financial market has led to evolution of trading process but policymakers must strategically supervise it for better results.

[lfbinvestmentbasics]

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[djellaldjouad]

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[priyashareindia9]

Mutual fund distributors play a pivotal role in the Indian financial market, acting as intermediaries between investors and mutual fund houses. These financial professionals are instrumental in guiding investors through the complexities of the mutual fund industry, facilitating transactions, and providing valuable insights into various investment opportunities. Regulated by the Securities and Exchange Board of India (SEBI) and governed by the Association of Mutual Funds in India (AMFI), mutual fund distributors are entrusted with significant responsibilities to ensure investors make informed decisions. In this article, we will delve into the roles and responsibilities of mutual fund distributors, shedding light on their crucial contributions to the investment landscape.

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(via China's Crackdown on Investment Bankers: A Risky Gamble with Global Implications)

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Unveiling the Kotak Mahindra Bank and Hindenburg Saga: What Really Happened?

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[techandtravel]

An Introduction to the Stock Market: How it Works and Why People Invest

What is the stock market? The stock market is a financial market where individuals and companies can buy and sell shares of publicly traded companies. It provides a platform for investors to trade securities such as stocks, bonds, and derivatives. How does the stock market work? The stock market works through exchanges, where buyers and sellers come together to trade stocks. These exchanges…

[igniteus]

Curious about the currencies that rule the world of forex reserves?

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[priyashareindia9]

Since the beginning of the stock market, new methods of opportunities have been introduced in each decade. There are indices like the Sensex and Nifty, which have become top indices to watch and observe in India. With the hike in online trading, retail investors seem to increase their interest in investing in the financial market. The index fund rebalancing is essential in order to update index funds over the rise or fall of nifty or other indices. Having a basic understanding of the function of an index fund will help investors invest in a smart way.

[allinhalf-store-blog]

Warren Buffett's Record-Breaking Cash Pile Reserves

Warren Buffett, the legendary investor, has achieved yet another milestone in his illustrious career. His cash reserves have reached an all-time high, signaling a strategic move in the financial landscape. Unveiling Buffett’s Astounding Cash Holdings Buffett’s financial acumen has long been the subject of admiration and study in the investment world. His ability to navigate the complexities of…

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Financial management- The need of the hour - Azuke Finance

Planning, organizing, directing, and controlling an organization's financial resources is referred to as financial management. Its main aim is to increase shareholder value while ensuring effective resource allocation. Budgeting, financial analysis, risk management, and strategic financial planning are important aspects of financial management.