What was the dot-com bubble and what happened when it burst?
In: Economics
The dot-com bubble was the product of investor speculation throughout the late 90s as a result of the rise of the internet. Investors effectively overhyped the rise of the internet by investing in a bunch of unproven companies that were thought to have lots of potential in the coming years. So, stock prices skyrocketed due to high demand and high expectations. As a product of this feedback loop, the Nasdaq experienced a 400% rise from 1995-2000. Everything was super overvalued. Eventually, people realized that their hype train had led to overvaluation of small startups in the spring of 2000. So, the stock market collapsed, taking down plenty of these new companies with it.
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