Air Pocket Stock
You know what an air pocket is. You're on the Southwest commuter to San Jose. Everything's fine at 37,000 feet, then all of a sudden, you're at 34,000 feet. The drinks seem gravity-less, and the flight attendant is plastered against the ceiling.
Air pockets happen in the stock and bond markets as well. Sudden shocks break the system. Whatever.com, that was happily going along, trading at $37/share...suddenly drops to $34.23/share on the unexpected shock of a reported metric not warmly welcomed by the Street.
But note that, just as Southwest usually returns to its 37,000 foot home, stocks hitting air pockets usually float back up to their trading range after the drinks get mopped up.
Related or Semi-related Video
Finance: What is Devaluation?1 Views
Finance allah shmoop What is devaluation steve Valuing a currency
i am making it less valuable can only happen when
the government which controls that currency decides to devalue it
So yeah it's a kind of their call when and
how much basically devaluation happens when a country decreases the
value of its currency against other currencies A lot of
times by just running the printing press all night printing
a whole bunch of their currency there's a whole lot
of supply on the market Well why on earth would
a country ever intentionally do this like devalue their currency
Well usually because it wants its goods to be less
expensive abroad like to be ableto export them more cheaply
to places like the u s and china and russia
by a lot of whatever's Well when a currency is
devalued the homegoods iii the home country goods are cheaper
in other markets This will usually lead to an overall
increase in exports for that country when it comes to
exports and imports though there's a kind of a union
ng ng anyway there's a counterbalance at play here imports
become mohr expensive and consumers at home likely shift away
From foreign teo purchase in country goods right it's kind
of protecting the country's own domestic product there Currency changes
Yeah well the result Yeah strengthened domestic product sales in
all of this might sound hunky dorey But while there
are some potentially nasty side effects local companies are getting
a bit of a break here which might make them
inefficient Slash lazy slash sloppy slash lacking in competitive spirit
to go fight it out in the global markets No
plus one of currency is devalued Each unit is worth
bless and that can lead to inflation which causes all
kinds Other problems down the line So that's just the
nutshell of devaluation making money not worthless But you know 00:01:57.019 --> [endTime] worth less
Up Next
What is Dead Cat Bounce? Whenever a security goes into free fall decline, contrarians or those thinking that the drop indicates overselling may sta...
What is a Busted Convertible? A busted convertible is a convertible bond that will never be converted to stock because the underlying stock price i...
What is a Bubble? In markets and economic cycles, any kind of rapid run up trend characterized by over exuberance and emotion over fundamentals tha...
Why do companies buy back or repurchase their own stock? Companies buy back their own stock because it helps them to increase the value of stock an...