This Disaster Should Be a Wakeup Call for Investors

Concerned about our nation's financial system? I can understand why. After all, disaster just struck. Both Silicon Valley Bank ("SVB") and Signature Bank (SBNY) recently failed. Furthermore, Credit Suisse (CS) had to sell itself to a rival to avoid going under. And if that weren't enough, First Republic Bank (FRC) needed a $30 billion lifeline […] You're receiving this email as part of your subscription to Michael Robinson’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] This Disaster Should Be a Wakeup Call for Investors March 28, 2023 Concerned about our nation's financial system? I can understand why. After all, disaster just struck. Both Silicon Valley Bank ("SVB") and Signature Bank (SBNY) recently failed. Furthermore, Credit Suisse (CS) had to sell itself to a rival to avoid going under. And if that weren't enough, First Republic Bank (FRC) needed a $30 billion lifeline simply to stay afloat! Large bank stocks were hurt, too, enduring major sell-offs. The four biggest banks lost a combined market value of $55 billion – in a single day. To be clear, I don't see any systemic risk to the banking system like we had during the financial crisis in 2007 to 2008. But recent events certainly serve as a wakeup call for investors like us. If one thing's for sure, it's that there are safer, far more profitable ways to play America's $3.6 trillion market for financial services. In fact, I'm watching a tech leader whose business is credit cards. And baby, business is a-boomin'! Last year, Americans tallied an extra $180 billion in credit card debt... And rest assured, the company that's on my radar is poised to grow right alongside this debt... > ADVERTISEMENT < Rolling Smartphone Blackouts... I have reason to believe that iPhones across America – tens of thousands of them – could start going "dark" by the end of this year. How confident am I? Enough to film an urgent "iPhone Blackout" message to Americans. If you're a profit-motivated person... this video is especially critical to you. [Click here for more details](. SVB's Demise Unless you live in Silicon Valley, you probably weren't too familiar with SVB. And yet its closure marked the second-largest banking collapse in U.S. history. But unlike Washington Mutual's demise in 2008 (the biggest collapse), complicated financial instruments with obscure acronyms had nothing to do with SVB's failure. This bank was simply taken down by good old-fashioned miscalculation. You see, thanks to lower-than-normal interest rates, coupled with stimulus packages and surging investor interest in tech, Silicon Valley startups had been riding high for years. Much of the money they received was deposited into SVB – in 2021 alone, the bank's deposits increased by a whopping 86% – and it ended up having so much money that it didn't know what to do with it all. As a result, it poured tens of billions of dollars into U.S. Treasuries and 30-year mortgages. History is Made Ordinarily, that would have been a great investment... except that soon after, the Federal Reserve began raising rates to fight inflation. And as rates went up, newer bonds began paying higher interest rates. Meanwhile, the value of existing mortgages and Treasury bonds dropped. When word spread that SVB was in trouble, depositors demanded their money back. Mass withdrawals soon created a bank run. And just 36 hours later, regulators took over the bank... And the rest is history... The Danger in a 'Safe' Investment Following SVB's demise, other banks found themselves in dire straits, if for no other reason than they realized that customer accounts were far too easy to close. And they could very easily – and quickly – find themselves in a similar situation. The entire sector was under pressure and investors took notice. Consider what happened to the financial-services-focused SPDR S&P Bank ETF (KBE). Considered a "safe" investment because it spreads risk across a basket of stocks, this exchange-traded fund ("ETF") lost nearly 25% of its value in less than three weeks. That's why I'm not recommending that you go out and buy shares of this ETF today, despite its "discount." Instead, I want to tell you about a better way to invest in the financial services sector. Don't worry, this company is not a bank. It doesn't take deposits or issue loans. And it's not at risk of a bank run, or even focused on a specific industry like SVB. However, this company does stand to profit handsomely from the record amount of credit card debt that we Americans can't seem to get enough of. Last year, according to a study from personal finance website WalletHub, U.S. consumers added more than $180 billion to their credit card balances – $85 billion in the fourth quarter of 2022 alone. That's the highest-ever increase in credit card debt for a single quarter. The company I have in mind is central to the credit card business. And it's one you're undoubtedly familiar with. In fact, you probably carry one of its cards in your wallet... It's Everywhere You Want to Be I'm referring to Visa (NYSE: V). Visa is the world's second-largest card payment network. But as I said before, this company is not a bank. In other words, it doesn't actually manage credit card debt, nor does it face any risk from users not paying off their balances. Rather, Visa runs VisaNet, a network that handles half of all card payments outside of China. To make that happen, VisaNet links together more than two billion debit, prepaid, and credit cards, more than two million ATMs, and some 15,000 financial institutions, all across 200 countries. It's all possible thanks to the company's four VisaNet data centers, located in Virginia, Colorado, London, and Singapore. These are some of the most advanced and secure facilities on the planet. Each one is fully protected against terrorist attacks, criminals, and natural disasters. They can all generate their own power and keep running even if utilities go down. Don't Miss This Pick Bottom line: Visa is a quintessential supply firm. It provides the technology that makes the global payment system work seamlessly. And in return, it takes a nice cut out of every one of the 80 billion transactions that happen over VisaNet each year. With a $460 billion market cap, Visa trades at about $215 per share. And over the past five years, its stock is up 81%, beating the S&P 500 during that period by 80%. While it's not exactly the "sexy" stock I reserve for my premium subscribers – to see what I am revealing for those readers, check out my "Pro" pick below – I believe it's a great case study in how to find companies that crush the overall market.   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Cheers and Good Investing, [Michael Robinson] Michael Robinson Chief Investment Officer Trend Trader Daily   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 1125 N. Charles Street Baltimore, Maryland 21201 [Update Subscription Preferences]( |Unsubscribe from this list RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended — as research only. You should consult a professional financial advisor before ever taking a position in any securities you see herein. 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