DEFINITION of ‘Valium Picnic’
A market holiday or a slow trading day. A valium picnic, also called a valium holiday, is a slang word used to describe the pace of the day. It is named after Valium, the proprietary name for diazepam, which is a pharmaceutical drug known for causing drowsiness.
BREAKING DOWN ‘Valium Picnic’
The income of brokers and investment advisors is directly related to the work that they do in the markets. When the markets are open and trading volumes are up they are able to help their clients buy and sell shares in large volumes, and may be compensated through a commission on the number of shares sold or by the amount of assets under management. Share volume may fall within an expected range regardless of whether the market is considered a bear market or a bull market.
In some cases, however, share volume is much lower than expected. This can have a major impact on not only a broker or investment advisor’s income, but also on the liquidity of shares in general. Trading volume below what is considered the average daily trading volume can make it more difficult to buy or sell shares in the open market.
Markets may have low volumes for a variety of reasons. The New York Stock Exchange (NYSE) closes several times a year in observance of major holidays, meaning that no shares can be traded and thus volume is zero. Volumes may also be low on days leading up to a market closure or holidays that are celebrated despite the markets remaining open. The slowdown is sometimes called a valium picnic because there is little that a broker can do when buy and sell orders are not being executed.
In some cases, such as around Christmas, markets may actually see an increase in volume leading up to the actual holiday closure. This is called the Santa Claus Rally.