Nothing protects anyone from panic selling, leading to “runs” and massive declines in prices or, in the case of insured bank deposits, liquidity. Sure, bank accounts of $250,000 or less are insured by FDIC – but that doesn’t help you if the bank is closed and the ATM is empty.

SIPC does not protect against investment losses; it only replaces shares lost if the custodian collapses; the shares themselves might still be worthless.

No one should ever invest in anything because of so-called “government insurance.” If you are unwilling to risk loss of your investment, don’t invest. Period.