What was the dot-com bubble and what happened when it burst?
In: Economics
In the late 1990’s as the Internet expanded from a niche service to the worldwide juggernaut that it is today, a lot of investors were trying to get rich by investing in web businesses. From 1995 to 2000, the NASDAQ (an index that tracks parts of the American stock market) rose by 400%. It went from under 1000 to nearly 5000 in that span – and when it popped, it was barely over 1000 in the fall of 2002. Basically the crash wiped out all of the gains that had come during the run-up.
It was the classic economic definition of a bubble. Speculation led to a ramp-up in prices that weren’t supported by underlying fundamentals, and eventually people saw the writing on the wall and started panic selling.
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