Market Crashes: The Dotcom Crash
AAA
  1. Market Crashes: Introduction
  2. Market Crashes: What are Crashes and Bubbles?
  3. Market Crashes: The Tulip and Bulb Craze
  4. Market Crashes: The South Sea Bubble
  5. Market Crashes: The Florida Real Estate Craze
  6. Market Crashes: The Great Depression (1929)
  7. Market Crashes: The Crash of 1987
  8. Market Crashes: The Asian Crisis
  9. Market Crashes: The Dotcom Crash
  10. Market Crashes: Housing Bubble and Credit Crisis (2007-2009)
  11. Market Crashes: Conclusion
Market Crashes: The Dotcom Crash

Market Crashes: The Dotcom Crash

By Andrew Beattie

When: March 11, 2000 to October 9, 2002
Where: Silicon Valley (for the most part)

Percentage Lost From Peak to Bottom: The Nasdaq Composite lost 78% of its value as it fell from 5046.86 to 1114.11.

Synopsis: Decades before the word "dotcom" slipped past our lips as the answer to all of our problems, the internet was created by the U.S. military, who vastly underestimated how much people would want to be online. Commercially the internet started to catch on in 1995 with an estimated 18 million users. The rise in usage meant an untapped market--an international market. Soon, speculators were barely able to control their excitement over the "new economy."

Companies underwent a similar phenomenon to the one that gripped Seventeenth century England and America in the early eighties: investors wanted big ideas more than a solid business plan. Buzzwords like networking, new paradigm, information technologies, internet, consumer-driven navigation, tailored web experience, and many more examples of empty double-speak filled the media and investors with a rabid hunger for more. The IPOs of internet companies emerged with ferocity and frequency, sweeping the nation up in euphoria. Investors were blindly grabbing every new issue without even looking at a business plan to find out, for example, how long the company would take before making a profit, if ever.

Obviously, there was a problem. The first shots through this bubble came from the companies themselves: many reported huge losses and some folded outright within months of their offering. Siliconaires were moving out of $4 million estates and back to the room above their parents' garage. In the year 1999, there were 457 IPOs, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading. In 2001 the number of IPOs dwindled to 76, and none of them doubled on the first day of trading.

Many argue that the dotcom boom and bust was a case of too much too fast. Companies that couldn't decide on their corporate creed were given millions of dollars and told to grow to Microsoft size by tomorrow.

Market Crashes: Housing Bubble and Credit Crisis (2007-2009)

  1. Market Crashes: Introduction
  2. Market Crashes: What are Crashes and Bubbles?
  3. Market Crashes: The Tulip and Bulb Craze
  4. Market Crashes: The South Sea Bubble
  5. Market Crashes: The Florida Real Estate Craze
  6. Market Crashes: The Great Depression (1929)
  7. Market Crashes: The Crash of 1987
  8. Market Crashes: The Asian Crisis
  9. Market Crashes: The Dotcom Crash
  10. Market Crashes: Housing Bubble and Credit Crisis (2007-2009)
  11. Market Crashes: Conclusion
Market Crashes: The Dotcom Crash
RELATED TERMS
  1. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
  2. Personal Spending Plan

    Similar to a budget, a personal spending plan helps outline where ...
  3. Global Recession

    An extended period of economic decline around the world. The ...
  4. The Great Recession

    The steep decline in economic activity during the late 2000s, ...
  5. Appraisal Management Company - AMC

    An independent entity through which mortgage lenders order residential ...
  6. Subprime Meltdown

    The sharp increase in high-risk mortgages that went into default ...
  1. Which day is known as China's "Black Tuesday" and why?

    On February 27, 2007, the Chinese stock market suffered a correction, causing choppy markets all over the world. The Shanghai ...
  2. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ...
  3. What is an echo bubble?

    To understand the term "echo bubble", you have to understand what a bubble is. A financial or economic bubble occurs when ...
  4. How do I lower my debt-to-income (DTI) ratio?

    A debt-to-income ratio is a personal finance measure that compares the amount of debt you have to your overall income. Lenders ...
comments powered by Disqus
Related Tutorials
  1. Stock Basics Tutorial
    Investing Basics

    Stock Basics Tutorial

  2. The Complete Guide To Planning A Yearly Budget
    Budgeting

    The Complete Guide To Planning A Yearly Budget

  3. The Complete Guide To Retirement Planning For 40-Somethings
    Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  4. The Complete Guide To Retirement Planning For 30-Somethings
    Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

  5. The Complete Guide To Vacation Properties
    Budgeting

    The Complete Guide To Vacation Properties

Trading Center