Stockalypse

AAA

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".

INVESTOPEDIA EXPLAINS '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. Graveyard Market

    A prolonged bear market where existing investors want to get ...
  2. Flash Crash

    The quick drop and recovery in securities prices that occurred ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock ...
  4. Stock Market Crash Of 1987

    A rapid and severe downturn in stock prices that occurred in ...
  5. Air Pocket Stock

    A stock that experiences a sudden drop, similar to a plane hitting ...
  6. Stuckholder

    The owner of a stock that can't be sold. The term stuckholder ...
RELATED FAQS
  1. What is the difference between a bank's liquidity and its liquid assets?

    A company's liquid assets can easily be converted into cash to meet financial obligations on short notice. Liquidity is the ... Read Full Answer >>
  2. How are risk weighted assets used to calculate the solvency ratio in regulatory capital ...

    Risk-weighted assets are the denominator in the calculation to determine the solvency ratio under the provisions of the Basel ... Read Full Answer >>
  3. What happens when a company defaults on its commercial paper obligations?

    As a practical matter, the Issuing and Paying Agent, or IPA, is responsible for reporting the commercial paper issuer's default ... Read Full Answer >>
  4. Can small investors buy collateralized mortgage obligations (CMOs)?

    Collateralized mortgage obligations (CMOs), which are pools of mortgage-backed securities (MBS), are available to smaller ... Read Full Answer >>
  5. In what ways does Bayesian probability support the probability default model when ...

    During the European debt crisis, several countries in the Eurozone were faced with high structural deficits, a slowing economy ... Read Full Answer >>
  6. What are the typical day-to-day responsibilities of a Chief Operating Officer (COO)?

    A country's debt crisis affects the world through a loss of investor confidence and systemic financial instability. A country's ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
  2. Mutual Funds & ETFs

    Did ETFs Cause The Flash Crash?

    On May 6, 2010, the DJIA plunged 998.5 points in twenty minutes. Find out more about what happened that day.
  3. Active Trading Fundamentals

    A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  4. Active Trading

    Connecting Crashes, Corrections And Capitulation

    Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit.
  5. 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.
  6. Forex Education

    October: The Month Of Market Crashes?

    In the finance world, October is a month to be feared, but is it justified?
  7. Investing

    The Art Of Selling A Losing Position

    Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.
  8. Personal Finance

    The Crash Of 1929 - Could It Happen Again?

    Learn about the series of events that triggered the Great Depression.
  9. Economics

    When Stock Prices Drop, Where's The Money?

    Market perception can create money - and make it disappear into thin air.
  10. Investing

    Top 5 Reasons For A Stock Slide

    Prices seldom drop without cause. Find out what might make your stock hit the skids.

You May Also Like

Hot Definitions
  1. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  2. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  3. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  4. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
Trading Center