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. How can I use an out-of-the-money put time spread for downside risk?

    Long Put Calendar Spread An out-of-the-money put time spread can hedge downside risk by selling an out-of-the-money put ... Read Full Answer >>
  2. What are the major laws (acts) regulating financial institutions that were created ...

    Presidents George W. Bush and Barack Obama, in conjunction with Congress, signed into law several major legislative responses ... Read Full Answer >>
  3. What are the similarities and differences between the savings and loan (S&L) crisis ...

    The savings and loan crisis and the subprime mortgage crisis both began with banks creating new profit centers following ... Read Full Answer >>
  4. What measures could the U.S. Government take to prevent another crisis similar to ...

    Some of the measures that the U.S. government can take to prevent another crisis similar to the savings and loan (S&L) ... Read Full Answer >>
  5. How was the American Dream impacted by the housing market collapse in 2008?

    The American Dream was seriously damaged by the housing market collapse in 2008. In many ways, the American Dream is a self-fulfilling ... Read Full Answer >>
  6. What major events and policy decisions led to the savings and loan crisis (S&L crisis)?

    The major events and policy decisions that led to the Savings and Loan Crisis were a period of volatility for interest rates ... 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. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!