Investors poured money into Internet startups during the s in the hope that those companies would one day become profitable, and many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the Internet. How the Dotcom Bubble Burst The s was a period of rapid technological advancement in many areas, but it was the commercialization of the Internet that led to the greatest expansion of capital growth the country had ever seen. Although high-tech standard bearers, such as Intel, Cisco and Oracle were driving the organic growth in the technology sector, it was the upstart dotcom companies that fueled the stock market surge that began in The bubble that formed over the next five years was fed by cheap moneyeasy capital, market overconfidence and pure speculation.
It was powered by the rise of Internet sites and the tech industry in general, and many of these companies went under or learned some valuable lessons when the bubble finally burst. Many investors lost substantial sums of money, helping to trigger a mild economic recession in the early s.
Analysts noted that some companies did not seem to be sobered by the burst of the bubble when web 2. Several factors combined to cause the dot-com bubble, which is usually defined as the period of investment and speculation in Internet firms that occurred between and The year marked the beginning of a major jump in growth of Internet users, who were seen by companies as potential consumers.
As a result, many Internet start-ups were born in the mid to late s. Many of these companies engaged in unusual and daring business practices with the hopes of dominating the market.
Most engaged in a policy of growth over profit, assuming that if they built up their customer base, their profits would rise as well. A lot of companies also expended a great deal of energy in market domination, attempting to corner the bulk of customers for a particular need.
Ad Investors responded to daring business practices with money, and lots of it. The American stock market rose dramatically during the period, with hundreds of companies being founded weekly, especially in tech hot spots like the Silicon Valley near San Francisco.
Many people associate lavish lifestyles with the dot-com bubble, since companies regularly sponsored exclusive events filled with fine food and entertainers.
At conferences and events focusing on the tech industry, the combined entertainment costs were sometimes counted in hundreds of thousands of dollars. Unfortunately for many companies and investors, the growth of the tech sector proved to be illusory.
Many high profile court cases targeted tech companies for unscrupulous business practices including borderline monopolies, and the stock market began to tumble down in a serious correction.
A decline in business spending combined with market correction to deal a serious financial blow to many dot-coms, and tech companies began to fold, one by one. The issues of the bubble were also compounded by outside factors, like a rise in outsourcing that led to widespread unemployment among computer developers and programmers.
The market also took a major downturn in the wake of terrorist attacks in the United States inand companies that had engaged in shoddy or questionable bookkeeping were essentially caught with their pants down in a series of government investigations. The loss of consumer faith in the tech industry also depressed earnings for dot-coms.
The rise of broadband in developed nations only a few years after the collapse of the dot-com bubble has been an issue of concern to some financial analysts, who recognize a recurring pattern. The growing number of high-speed users led to a new proliferation of dot-coms, especially social networking sites, and some investors fear that the tech industry may be facing a bubble 2.What was the 'Dotcom Bubble' The dotcom bubble was a rapid rise in U.S.
equity valuations fueled by investments in Internet-based companies during the bull market in the late s. During the. The update includes new entries, including "the dot com boom and bust, Clinton's impeachment, the events of September 11, and American's war on terrorism.
The Great American History Fact-Finder Someone should tell the creditors that the dot com boom is over - Bertelsmann's offer is a good one.
During the dot-com boom investors were pushing companies to take and spend boat loads of money, even if the companies weren't ready. The successful companies still took the money, but didn't use it unless it would add relative value to the business. This boom in house prices came to an end in , and as house prices fell in , the negative wealth effect pushed the economy into recession.
Boom and Bust The dotcom bubble burst in , also the events of 9/11 left the US facing a serious downturn. 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.
Essays Tagged: "Boom and bust" Dot com crisis. boom and bustIn Australia, New Zealand, the EU, US and other parts of the globe the s saw tremen.