Just quick refresh on the ongoing turmoil in the financial markets. The DOW dropped 777 (auspicious?) points last night. Here’s how last night’s drop stacks up against history:
The prognosis? It might be too early to tell, but large scale collapses have been associated with investors “capitulating” or giving up on the market–which is often the turning point in any collapse.
In the stock market, capitulation is associated with “giving up” any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling.
Although as we can see from the above table, the DOW drop busted point records, but not percentage records. There still might be a long ways to go before people can be said to have really “given up”.
Bloomberg shares more of the situation here.