Dotcom Boom
“The Dotcom Gloom”: The Boom and Bust of the Dotcom Industry Money plops down on the counter to pay for a new pair of shoes. Plastic cards swipe through to purchase a side table. Some people argue that society’s obsession with material goods comes from greed and decadence, but really it goes deeper than that. It comes from the noble tradition of capitalism. In the 1990s, America watched as the traditional face to face interactions of capitalism changed. It was changed through the Internet and is called ecommerce. First introduced to the government in the 1960s, the Internet grew steadily until the 1990s. With the launch of the World Wide Web to the public in 1991, companies such as EBay, Amazon, Google, and Yahoo sprout up quickly encouraging more than sixteen million people to use the Internet by 1995. Investments in the Internet boomed too, as seen in figure one. The Dotcom Bubble started in April of 1997 and lasted until June of 2003 (Business Insider). A myriad of reasons caused the Dotcom Bubble to happen but three reasons stand out in particular. The main reasons for the Dotcom Bubble were over speculation, newness of the market, and a drop in consumer confidence.
Figure 1 (BBC)
Looking first at the definition of speculative, it can be seen that indeed the Dotcom Bubble was hugely speculated. A speculative bubble is “caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values. This drives trading volumes higher, and as more investors rally around the heightened expectation, buyers outnumber sellers, pushing prices beyond what an objective analysis of intrinsic value would suggest” (Investopedia). To show how the stock market grew uncontrollably, one must look directly at the stocks to find the trends. Netscape is a good starting point for explaining how the bubbles grow. Netscape “went public August 9, 1995 at an offer price of $28. On the same day it hit a high of $74¾ and
Figure 1 (BBC)
Looking first at the definition of speculative, it can be seen that indeed the Dotcom Bubble was hugely speculated. A speculative bubble is “caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values. This drives trading volumes higher, and as more investors rally around the heightened expectation, buyers outnumber sellers, pushing prices beyond what an objective analysis of intrinsic value would suggest” (Investopedia). To show how the stock market grew uncontrollably, one must look directly at the stocks to find the trends. Netscape is a good starting point for explaining how the bubbles grow. Netscape “went public August 9, 1995 at an offer price of $28. On the same day it hit a high of $74¾ and
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