The+Dot-Com+Bubble

The Dot Com Bubble- John Li, Caroline Chung, Sam Sanders, Christy Von Pusch

The [|Dot-Com Bubble] began in 1995 and ended in 2000. The bubble burst on March 10, 2000. The Bubble was caused by the rising stock market due to the Internet and technology. The stock market rose because people thought that the Internet was the future of business. In 1995, there was a major jump in the growth of Internet users, who were seen as potential consumers by many growing companies. As a result, many Internet start-up companies were created, also known as "dot-coms." Many companies engaged in risky business practices in hopes of dominating the market, focusing on growth, rather than realistic profit. New public companies had no realistic business model to create a profit. Companies such as [|Amazon]and [|Google]had to spend rapidly to expand its search engines, while many other companies, like [|Hotmail]and [|the Learning Company], made millions. Boo.com spent $188 million in just six months, and when bankrupt in May 2000. Everyone, even formerly reserved investors, tried to get involved in the hype, and invested recklessly in these companies. However, the bubble couldn't last. First, the government sued [|Microsoft]and deemed it a Monopoly. Other companies were too focused on growing and accommodating more users ; many of these companies used fraudulent accounting prices to increase their stock price, thus enticing more investors and leading to more growth. These companies thus didn't make enough revenue to turn a profit, and they thus lost money. After investors realized that the hype of the internet and technology didn't live up to its promises, reality quickly set in. Stock-owners then tried to quickly unload their rapidly devaluing stock assets, which lead to a huge crash in the NASDAQ. The NASDAQ dropped dramatically from its peak of 5048.62 in 2000 to 1108.49 in 2002, which lead to a loss of over 8 trillion dollars.
 * __The Rise and Fall of the Dot-Com Bubble __**

During the Dot-com bubble, stock prices were higher than usual. This lead people to believe that they were wealthier than they actually were. Because these people believed that they were wealthier than they were, everybody wanted to get a piece of the action in the growing Internet. There was an increase in [|entrepreneurship], and many companies, like the previously mentioned Hotmail and the Learning Company, made fortunes. The NASDAQ reached an incredible peak of 5048.62, which was significantly higher than the past.
 * __Life During the Bubble __**



After the Dot-com bubble, the SEC fined top investor firms for misleading investors. Several companies were accused of fraud for misusing shareholders' money, and many of these companies filed for [|bankruptcy]. The stock market crashed, and it caused the loss of over five trillion dollars in the market value of companies. All of these problems were only exacerbated by the [|9/11] events. University degree programs for computer-related careers dropped dramatically, and prices dropped rapidly. The government decreased [|interest rates]to as low as 1% to help restart [|capital]and increase consumer spending. The bubble has since lead to the present worldwide recession, which lead to lower wages and higher unemployment. Currently, the government is looking to use stiumulus packages in order to help us out of the recession, but it has not yet worked.
 * __Life After the Bubble __**

People believed that the [|internet]and technology would stay around forever. Because the internet and advanced technology seemed incredibly reliable, people thought that investing in them would be safe and guaranteed income. None of these investors thought that the internet and technology would crash, so when it did, people were surprised.
 * __Why was this Bubble Different? __**

Overall, what really happened is that the internet just started and people were really excited about it. They began to invest in every company that had to do with the internet because for the most part they were doing well. The problem was they went overboard. People were starting to get funded for only a simple “idea” if it had to do with the internet. As people continued to get funded with just ideas they began to try and build and expand their ideas with the money. This seemed okay at the time, until U.S. took a big shot at Microsoft. In the case of the [|U.S. vs. Microsoft], Microsoft was ruled a monopoly. This started to make people realize that funding ideas wasn’t safe because there was no proof that these companies would do well. Loads of investors at the same time began to pull out and those companies that were just “ideas” went bankrupt because they couldn’t continue their business without money, stocks began to free fall and technology stocks fell, and at that point the Dot-com bubble burst.
 * __Brief Summary __**