I don’t talk about this much but I have 12 years of experience as a TACP Officer (8 years on active duty and I’m still in the Air National Guard). TACP is considered an Air Force Special Warfare career field.

For the most part, special operations career fields have intense initial training/selection programs. These programs tend to have 70%+ failure rates.

But here’s the thing. Most people don’t fail; they quit.

This doesn’t mean the courses are easy. They’re not. But they’re passable. However, the instructors are looking for people who will stay calm under pressure and think clearly.

They do things to make you think about the immediate challenge or threat and they make that threat seem impossible to overcome so you stop thinking logically and panic.

Most people quit because they stop thinking logically, even though they could have passed the course.

That’s what happens when people panic. They go into fight-or-flight mode and stop thinking logically.

Unfortunately, there are also people (like prominent VCs/Angel investors on Twitter typing in all caps) who will either lose their minds and make others panic….or intentionally try to make others panic for their own benefit.

I don’t care to go into detail about how disgusted I am at a lot of prominent people on Twitter. Maybe they are just genuinely panicked.

But I do want to share my perspective on the situation.

So here’s my best take…

FWIW

I work at a startup, have money in the bank, and am invested in public companies. So it’s not like I’m immune from what’s going on.

I have just learned that panicking is never the right move. You don’t make good decisions when you panic.

Here’s how I’m dealing with this

Planning

The response to any crisis starts before the crisis ever begins. In the military, we go through what’s called the military decision-making process, where we gather information, analyze it, come up with multiple courses of action, test them against possible best and worst-case scenarios, modify/combine elements of our courses of action, communicate our plan, take time to prepare, execute the plan, take feedback and adjust as needed.

How does that relate to real life?

We have tried to apply some basic rules of thumb that will cover 98% of possible scenarios.

1. Have multiple sources of income

2. Have a 3-6 months emergency fund in liquid assets (for us, this isn’t above the FDIC limit of $250k so that’s not a concern)

3. Live below your means & try to invest 10%+ of your net income

4. Don’t get over-levered. We try not to borrow money for anything other than our fixed-rate mortgage and we have one car payment

5. Have three days - 2 weeks of food/water. At the risk of sounding like a prepper. I live in Florida and distinctly remember having to wait hours in FEMA lines for MREs when I was a kid after hurricanes

These five basic steps aren’t easy to accomplish but they’re simple. We didn’t start in a situation to accomplish all of these, but after 12+ years of working, saving, investing, and learning, we’re there…. and I know you can get there, too if you’re not already.

You can handle 98% of the possible bad scenarios if you accomplish these five things…. actually, I’ll add two more.

6. Don’t invest any more than 5% of your wealth in any single “asset” (this is a personal rule of thumb that I need to fix)

7. Understand FDIC and SIPC insurance on your money + investments (link). $250k of cash per account holder per bank is FDIC insured in checking/savings accounts and $500k per customer for all accounts at the same brokerage, including a maximum of $250,000 for cash.

What I’m doing now

I’m not selling all my stocks and going entirely to cash. I realize this means my account might take a hit. But we’ve come back stronger from every crisis to date and I’m willing to bet that trend continues.

I also think some signs point to the most likely outcome: by Tuesday or Wednesday at the latest, things will be normal. Of course, there’s the potential that this will spiral out of control with enough widespread panic. I don’t think that will happen, though.

So we all have a decision to make. How are we going to respond? Are we going into self-preservation mode and panicking?

You certainly can.

But I’m not. Our nation (and the world) has been through countless crises. Some that we could never have imagined.

And one way or another, we have always found a way through. I’m betting this time will be like the last.

We will get through this and things will go back to “normal”

Again, this doesn’t mean companies won’t be impacted and people won’t lose money. This is unavoidable, but I don’t think the most likely scenario is some crazy collapse of regional banks.

So I will go on with living life as normally as possible. I won’t doom-scroll Twitter or obsess over what I’ll do next week if things spiral out of control…. I don’t think that’ll be time well spent.

Besides, if we are on the verge of a total banking collapse where I lose all my money, I’d rather spend the rest of the weekend with my loved ones enjoying life.

Current Portfolio

That’s all I have to say about the SVB situation. It sucks for those involved. But at this point, I see no reason to panic about it turning into contagion.

The portfolio is now down $6,914 for a money-weighted return of -7.6% since I started it on February 15, 2022. I have contributed $156,167.

Year to date, the portfolio is up $18,892 for a money-weighted return of 16.26

Current holdings and what I’m adjusting moving forward

The next screenshot is ordered by current value. One adjustment I’m making is as the portfolio gets larger, I don’t want to have any more than 5% of invested capital in any single stock.

If I invest 5% of my portfolio in a stock and it grows to say 10% or maybe even 12% of the portfolio due to strong business performance, I’d be comfortable letting it stay at 10%.

I’ve seen the arguments for concentration, but if blowups like SVB and others in the past have taught me anything, it’s that no one knows what’s going to happen with any individual company or stock.

So my way of protecting my own family’s money will be not to allow my own overconfidence destroy my family’s financial future. So I’d rather be less concentrated and give up some upside, than suffer a major loss.

The only change this week was starting a small position in Occidental Petroleum (OXY). I’ll write more in-depth about it (I was going to this weekend, but felt the SVB panic situation was more important).

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