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".

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.
 



comments powered by Disqus
Hot Definitions
  1. Direct Consolidation Loan

    A loan that combines two or more federal education loans into a single loan. A Direct Consolidation Loan allows the borrower to make a single monthly payment. The loan is facilitated by the U.S. Department of Education and does not require borrowers to pay an application fee.
  2. Through Fund

    A type of target-date retirement fund whose asset allocation includes higher risk and potentially higher return investments "through" the fund's target date and beyond.
  3. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold or disposed of first.
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. The American dream is achieved through sacrifice, risk-taking and hard work, not by chance.
  5. Texas Ratio

    A ratio developed by Gerald Cassidy and other analysts at RDC Capital Markets to measure the credit problems of particular banks or regions of banks. The Texas ratio takes the amount of a bank's non-performing assets and loans, as well as loans delinquent for more than 90 days, and divides this number by the firm's tangible capital equity plus its loan loss reserve.
  6. Amortized Bond

    A financial certificate that has been reduced in value for records on accounting statements. An amortized bond is one that is treated as an asset, with the discount amount being amortized to interest expense over the life of the bond. If a bond is issued at a discount - that is, offered for sale below its par (face value) - the discount must be treated either as an expense or it can be amortized as an asset.
Trading Center