Passive Loss

 I'm sure we've all recently seen the myriad of news article headlines highlighting the Silicon Valley Bank (SVB) Collapse  that arisen from a bank run, with many people drawing comparison between it and the 2008 Lehman Brother's collapse. Additionally, if you're into Cryptocurrency, I'm sure you've realised the sharp drop of the crypto market recently, along with USDC (Celsius) losing its peg, which is rather natural given the fact that it has a large amount of collateral with SVB.  Source: RTE News In this short article, I'm not here to explain what happened that led to the collapse, since many articles have already done a great job of that. Instead, I'm here to discuss the potential ramifications regarding the recent  unprecedented move  by the US Government that ensures all deposits in SVB would be guaranteed by Monday, which is today.  The reason why it's unprecedented is the fact that the guarantee includes deposits over $250,000 in US Dollars...

 Recently, I've had the  unfortunate  chance of discussing the S&P500 with one of my good friends, who has become acquainted with the world of investing as of late. Jokes aside, he mentioned that a friend of his said that the S&P500 would generate guaranteed returns in the long term.  That thought slightly concerns me.  I think it's not a stretch to say that in recent times, an unprecedented number of retail investors have entered the market, be it from the Reddit GameStop (GME) kerfuffle or simply common advice. Naturally, that results in a whole bunch of people getting thrust into the world of investing without any knowledge whatsoever, and that's okay! But it's important to ensure that common advice is not simply parroted without understanding the rationale behind it in the first place.  So, why is the S&P500 touted as a wise investment in the first place? For those who are new, the S&P500 stands for The Standard & Poor's 500. It's a ...