Stockalypse

DEFINITION of 'Stockalypse'

An abrupt and steep decline in the price of a stock or equity index. A stockalpyse can wipe out tens of millions in market capitalization when it slams an individual stock, and billions in market value when its impact is felt across the broad markets. The length of a stockalypse can vary from a few weeks to many months, depending on the factors that have precipitated it. A broad stockalypse can exert a substantial drag on an economy, as the destruction of stock market value causes a negative wealth effect that in turn impacts consumer spending. The term is a combination of “stock” and “apocalypse".

BREAKING DOWN 'Stockalypse'

In the case of a specific stock, a stockalypse can be triggered by something as mundane as a massive earnings miss, or a sudden adverse development like a negative court ruling in a lawsuit. A stockalypse in the broad markets is caused by far bigger forces that affect risk appetite and investor sentiment. These could range from a collapsing “bubble” in an influential part of the economy and tighter monetary policy, to excessive valuations and spiraling macroeconomic or geopolitical risk.

The biggest stockalypse in recent memory is easily the global credit-crisis that lasted from October 2007 to March 2009, which erased $37 trillion or 60% of worldwide market value in an 18-month period. In particular, the devastation in global financial markets that commenced with the bankruptcy of Lehman Brothers on September 15, 2008 and lasted for more than a month is a prime example of a fiery stockalpyse.

A transient stockalpyse may occasionally be sparked by human error, such as the “Flash Crash” of May 6, 2010 that saw the Dow Jones Industrial Average plunge almost 1,000 points but recover from that loss within minutes.
 

RELATED TERMS
  1. Lehman Brothers

    A firm that was once considered one of the major players in the ...
  2. Flash Freeze

    A sudden shutdown in trading activity on an exchange. “Flash ...
  3. Pain Trade

    The tendency of markets to deliver the maximum amount of punishment ...
  4. Profit Taking

    The act of selling a security in order to lock in gains after ...
  5. Equity Market

    The market in which shares are issued and traded, either through ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value ...
Related Articles
  1. Personal Finance

    Case Study: The Collapse of Lehman Brothers

    Lehman Brothers survived many financial crises in its long history. Find out what finally drove it to bankruptcy.
  2. Investing Basics

    Common Sense Strategies For Adverse Markets

    Adverse markets require skillful adjustments to reduce risk and find new profit opportunities.
  3. Fundamental Analysis

    Where's The Market Headed Now?

    Whether up, down or sideways, learn about some of the factors that drive stock market moves.
  4. Economics

    Lehman Brothers: The Largest Bankruptcy Filing Ever

    Lehman Brothers survived several crises, but the collapse of the U.S. housing market brought the company to its knees.
  5. Economics

    A Comparison Between a Default and a Collapse

    Is the Greek default similar to the Lehman Brothers collapse?
  6. Investing Basics

    Explaining Market Value of Equity

    Market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.
  7. Professionals

    Average Market Returns

    We look at the major indexes and their average yearly returns.
  8. Investing Basics

    What Is The Value In Value Investing?

    Value investing has its advantages, but it also has significant drawbacks. We look at the pros and cons.
  9. Active Trading Fundamentals

    Forces That Move Stock Prices

    You can't predict exactly how stocks will behave, but knowing what affects prices will put you ahead of the pack.
  10. Active Trading Fundamentals

    Five Minute Investing: Things To Avoid

    Building up the last chapter, we are now ready to explore and face the mistakes that nearly every beginning investor makes. Do not skip over this or any other part of the book because you need ...
RELATED FAQS
  1. How does the performance of the stock market affect individual businesses?

    Learn how stock markets affect individual businesses by influencing consumer spending levels and affecting the way companies ... Read Answer >>
  2. How do you compare the Dow Jones Industrial Average (DJIA) and the Nasdaq?

    The Dow Jones and Nasdaq work in different ways to signal market trends. Learn which is best for you. Read Answer >>
  3. What caused the stock market crash of 1929 that preceded The Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ... Read Answer >>
  4. What is the difference between market capitalization and equity?

    Understand the difference between market capitalization and equity, two primary measurements used to evaluate the worth of ... Read Answer >>
  5. What causes a significant move in the stock market?

    There is a nearly infinite number of factors that can cause the stock market to move significantly in one direction or another. ... Read Answer >>
  6. How does a bull market affect the economy?

    Find out why it can be difficult to prove any real causal link between rising stock market prices and a healthy, growing ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center