What was the dot com bust?

Answer 1

Essentially, stocks in dot com companies had gone through the roof in the late 1990s - everyone believed that the 'net was going to take over the world, newspapers and high street stores would be history within five years, etc etc.

Investors bought any and every stock that had ".com" attached, even the freakishly weird ones...

...didn't work out like that, did it?

When investors worked this out, the "dot com bubble" burst and stocks in internet companies dropped like a stone. "Boo.com" - a heavily hyped and overfinanced online garment shopping site - was cited as one of the major triggers for the burst.

And damn right too... there was some really strange stuff going on. You actually heard dotcom barkers saying "forget profit, GROWTH is more important than profit" and such.

Most of the dotcom companies that had idiotic, nice but unworkable or outright fraudulent business plans vanished within six months. The strong ones - Yahoo, Amazon, and others took the hit and survived. A few completely unrelated companies also died, though, because of the general stock market depression that resulted.

I suspect there's going to be a similar burst in the next few months with online gaming sites - US regulatory bodies are gearing up to hammer down on such sites, citing the Wire Fraud rules (gambling via telephony).

If you're interested in history, almost exactly the same thing happened in Victorian times: during the South Sea Bubble, there was frantic trading in anything that related to companies on Pacific islands (including one that claimed they were going to extract gold from seawater. Hmmm.)

The moral: don't, don't don't, DON'T BELIEVE THE HYPE...

Answer 2

The Dot Com Bust was around the year 2001 when investors clued in that *not all* interesting internet business ideas would work, and the market sorta collapsed.

Answer 3

Irrational exuberance. One great observation made by the recently retired Chairman of the Federal Reserve Bank, Alan Greenspan.

Answer 4

when the penney dropped that it was going to be a struggle to make money on the internet