Capital LostEnron currently stands as the U.S.'s largest corporate bankruptcy in terms of lost value -- about $66 billion. But don't think it takes a combination of fraud, deregulation and complicity from the bean counters for disasters of this magnitude to strike equity holders.
What Moves Stocks?In order to limit the havoc "disaster stocks" can wreak, it helps to understand what moves share prices. Investors typically look to a variety of short-term factors. Ask most people why their stocks are going up and down, and they'll reel off a list of news-driven events: economic releases, analyst rating changes, quarterly earnings reports, conference calls, etc. These factors have a de minimus impact when compared to the real action. The true cause is much less complicated: Share prices are moved by large-scale buying and selling by institutions. We discussed this extensively in
From peak to pennies
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|Source: Barry Ritholtz|