The+Dot-Com+Buuble

__**The Dot-Com Bubble**__

Sibtain Bokhari, Jordan Sloate, Rudy Perez, Nate Forman, Ben Ritzer

The Dot-com bubble was an economic period stretching from 1995 to March of 2000. The bubble grew during the rapid increase of e-commerce in which consumers invested greatly. Once websites began to fail, the Dot-Com Bubble began deflating. The bubble peaked on March 10th, 2000. Life during the bubble was all about how the Internet growth was the most profitable investment ever, and that anyone could make money by investing in these companies because they would just grow no matter what. As usual, stocks in this area (NASDAQ) soared during the bubble, helping to convince the public to buy into it, and at the height of the bubble companies were able to sell their stock for a significant amount of money before they ever made a penny in real revenue. Those stock valuations were completely out of sync with economic reality, but like most bubbles the market ignored the fact that there were way to many Internet companies for even half of them to exist over the mid-term. After the bubble the NASDAQ crashed from 5048 points to a low of 3649 within 1 month, eventually to a low of 1100 in 2003. However, since this bubble did not cause a fundamental problem in the banks like the 2008 recession did, the only stock market index that truly got crushed was the NASDAQ, while the overall economy experienced only a mild recession. However, since the tech industry had grown to about 8% of the overall economy, unemployment did rise to about 6%. Although credit did not have a major role in the evolution of the Dot-Com Bubble, during the peak years of the dot-com bubble, companies started borrowing large quantities of venture capital (money needed to start up a company) because of the low interest rates between 1998 and 1999. Since the success of an Internet company relies on how fast the company can expand its customer base, many companies were able to sell their ideas using the novelty of the Internet concept. Many companies started borrowing so much money that they were unable to turn up a profit from the initial investments because their ideas were unrealistic or simply unprofitable.

This bubble was said to be different because as the Internet became a more prevalent force, entrepreneurs with ideas started to use the Internet. Their business plans relied on essentially using advertising. They would offer a service for free, and hope that the awareness of products through those sites and advertisements would generate quick profit. Because during this time interest rates were low, it was easy to build up capital. People invested because it seemed like the next big thing and quick money. But, i think that this bubble was different because it was the new big thing, the Internet, and as the models were presented, people saw a great potential output, but there was no real tangible profit, it was all speculation. Nothing was done on the side of the government to prevent another bubble like that from happening. It was more so investors putting their money in places they did not understand, and wasnt due to a lack of regulation or some faulty government policy.