Internet Bubble

AAA

DEFINITION of 'Internet Bubble'

A rapid rise in equity markets caused by speculation into online-based companies (referred to as dotcoms).


The internet bubble of the late-1990s is often considered a benchmark case of investors abandoning fundamentals in their search for the next big thing. As consumers flocked to the internet, investors were afraid that not becoming involved would be a huge missed opportunity. Venture capital companies and speculators poured money into internet startups during the 1990s in the hope that those companies would one day become profitable.

INVESTOPEDIA EXPLAINS 'Internet Bubble'

The internet bubble of the 1990s burst after more than five years of steady market growth, peaking on March 10, 2000. The collapse of many startup internet companies, along with several interest rate increases by the Federal Reserve, led to an economic recession precipitated by a rapid decline in the Nasdaq.

RELATED TERMS
  1. Nasdaq

    A global electronic marketplace for buying and selling securities, ...
  2. Investing Fads

    Investing fads are current popular trends that relate to investments. ...
  3. Dotcom

    A company that embraces the internet as the key component in ...
  4. Housing Bubble

    A run-up in housing prices fueled by demand, speculation and ...
  5. Bubble

    1. An economic cycle characterized by rapid expansion followed ...
  6. Tech Bubble

    A pronounced and unsustainable market rise attributed to increased ...
Related Articles
  1. Home & Auto

    Why Housing Market Bubbles Pop

    Home price appreciation is not assured. Can you withstand the volatility in this market?
  2. Insurance

    A Review Of Past Recessions

    Here we look at the biggest economic declines in the U.S. since the Great Depression.
  3. Investing Basics

    Black Swan Events And Investment

    These world-changing events are rare and difficult to predict, but they have serious implications for your investments.
  4. Active Trading Fundamentals

    How The Power Of The Masses Drives The Market

    Market psychology is an undeniably powerful force. Find out what you can do about it.
  5. Personal Finance

    How Stock Market Indexes Changed Investing

    Find out how the first market averages were calculated and what they mean for investors today.
  6. Economics

    When The Federal Reserve Intervenes (And Why)

    The Federal Reserve doesn't interfere with the economy every time it flounders. Find out more here.
  7. Economics

    5 Steps Of A Bubble

    Bubbles are deceptive and unpredictable, but by studying their history we can prepare to our best ability.
  8. Economics

    The Myth About Market Bubbles

    Bubbles have made and ruined fortunes. Though they can be difficult to predict, understanding how they work gives you a visible advantage.
  9. Economics

    2000-2009: The Lost Decade

    A look back at a volatile decade for investors and what it can teach us going forward.
  10. Economics

    Economic Meltdowns: Let Them Burn Or Stamp Them Out?

    Whether the Fed should intervene in market bubbles is up for debate. Learn about both sides here.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center