2006-08-10 04:40:46 · 7 answers · asked by g-man 1 in Business & Finance ➔ Investing
The tech bubble was an anomoly that rarely occurs on such a grand scale. It actually started in 1995(my opinion), and never let up till mid 2000.Alan Greenspans famous"Irrational Exuberance" speech was in Dec. 1996, so there was reason for concern even then.Markets are efficient, given time they will correct themselves.
I think bubbles are made for Economists, philosophers,"experts", & countless others to speculate over;then write books & thesis on the subject.
Below is a (yawn) long link on the subject.
2006-08-10 05:29:27 · answer #1 · answered by frith25 4 · 0⤊ 0⤋
The Fed continued to tighten monetary policy. The valuations got way too high. The institutional investors and investment banking firms got out. All of the previous reasons played a part, but all bubbles eventually pass in one way or the other. So the real estate bubble and the debt bubble will also come to and end soon.
2006-08-13 11:54:41 · answer #2 · answered by perdidobums 5 · 0⤊ 0⤋
Two reasons: 1) The "irrational exuberance" that Alan Greenspan famously described. 2) The high short term fed funds rate of 6.5% that Alan Greenspan created.
1) People get too excited & start gambling with their investments. This has happened in the past with things like railroads.
2) A fed funds rate of 6.5% makes it much more difficult for people to pay their home mortgages. Then they have less money to invest. Or worse, they have to sell some of their investments to make ends meet.
Combine 1) and 2) and the speculative investment bubble pops!
2006-08-12 00:30:05 · answer #3 · answered by Tom H 4 · 0⤊ 0⤋
A couple of smart investors decide to take profits, others follow suit, and suddenly there's an avalanche of sellers and a dearth of buyers: Same thing that happens at the end of any bubble.
2006-08-10 12:46:18 · answer #4 · answered by Yardbird 5 · 0⤊ 0⤋
"Irrational exuberance" in the stock market finally halted, and the funds available for investing in new technologies dried up.
2006-08-10 11:46:14 · answer #5 · answered by kako 6 · 0⤊ 0⤋
There were no more fools willing to buy fad stocks at inflated valuations.
2006-08-10 12:27:41 · answer #6 · answered by NC 7 · 0⤊ 0⤋
Fear and greed.
2006-08-10 12:12:00 · answer #7 · answered by Anonymous · 0⤊ 0⤋