Trading expert explains why SVB collapsed

Trading expert explains why SVB collapsed

When SVB Financial Group -owned Silicon Valley Bank collapsed on March 10, it set in motion a fear that reverberated throughout the financial sector.

What Happened: Tuchman, who refers to the exchange as the delta of information and the ultimate pricing mechanism for the world markets, told the publication on the morning of March 10 that investors and news outlets were calling him more than usual. Some of the questions that hedge funds, large institutions, wealthy individuals and customers posed to him included:

It is important to know that there is a human being at the point of execution not a machine, not a robot, not an algo, according to Tuchman.

How do I survive a Stock Market Crash?

The extreme volatility in the markets over the last few years was underlined by Tuchman.

Things that could take generations to happen can now happen between lunch and coffee break, he told Business Insider. We can be in a bear market at 11 in the morning, and by three o'clock we're in a bull market. On the day SVB collapsed, Tuchman, who has traded through the stock market crash in 1987, the dot-com bubble burst of 2000, the financial crisis of 2008 and the 2020 COVID sell-off, said he didn't have lunch. He told the publication that when multiple stocks stopped trading all at once, he sensed that something serious would happen. The pause in trading gave everyone a chance to decide what they wanted to do, since nobody is advantaged from stocks going up 30 points and down 40 points, according to the trader.

He added that it gives everyone a chance to calm down, see where the bodies are buried, and then make a decision going forward.

Tuchman said that he realized that the market was selling off some contagion stocks radically, as he used to trading a lot in these types of stocks. He said he watches what is going on every second on the thousands of monitors that cram trading floors.

He said that many traders went away over the weekend with uncertainty in the air after SVB's downfall.

Markets don't like unknowns and anxiety, Tuchman said. We didn't know much more than we knew. He said that it was a perfect storm. There's a lack of information and transparency and clarity. You've got a weekend coming up. You've got a looming Fed meeting. You have got a huge interest rate raising environment. You have got a tech sector under fire. All eyes are on the market. Read Next: First Republic Bank Tumbles, S&P 500 Volatility Continues Ahead of the Critical Federal ReserveFederal Reserve Meeting Next Week: First Republic Bank Tumbles, S&P 500 Volatility Continues Ahead of Next Week's Critical Federal ReserveFederal Reserve Meeting.