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.

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Finance: What is Devaluation?1 Views

00:00

Finance allah shmoop What is devaluation steve Valuing a currency

00:08

i am making it less valuable can only happen when

00:12

the government which controls that currency decides to devalue it

00:17

So yeah it's a kind of their call when and

00:19

how much basically devaluation happens when a country decreases the

00:24

value of its currency against other currencies A lot of

00:27

times by just running the printing press all night printing

00:30

a whole bunch of their currency there's a whole lot

00:32

of supply on the market Well why on earth would

00:35

a country ever intentionally do this like devalue their currency

00:39

Well usually because it wants its goods to be less

00:43

expensive abroad like to be ableto export them more cheaply

00:47

to places like the u s and china and russia

00:50

by a lot of whatever's Well when a currency is

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devalued the homegoods iii the home country goods are cheaper

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in other markets This will usually lead to an overall

01:01

increase in exports for that country when it comes to

01:04

exports and imports though there's a kind of a union

01:06

ng ng anyway there's a counterbalance at play here imports

01:10

become mohr expensive and consumers at home likely shift away

01:15

From foreign teo purchase in country goods right it's kind

01:18

of protecting the country's own domestic product there Currency changes

01:22

Yeah well the result Yeah strengthened domestic product sales in

01:26

all of this might sound hunky dorey But while there

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are some potentially nasty side effects local companies are getting

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a bit of a break here which might make them

01:35

inefficient Slash lazy slash sloppy slash lacking in competitive spirit

01:40

to go fight it out in the global markets No

01:43

plus one of currency is devalued Each unit is worth

01:45

bless and that can lead to inflation which causes all

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kinds Other problems down the line So that's just the

01:51

nutshell of devaluation making money not worthless But you know 00:01:57.019 --> [endTime] worth less

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