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What is a dot com (.com) bubble? How this bubble burst?

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The dotcom bubble, was a rapid rise in U.S. It was also known as the internet bubble. In 2001 and through 2002 the bubble burst.
During the dotcom bubble, the value of equity markets grew exponentially, with the technology-dominated Nasdaq index rising from under 1,000 to more than 5,000 between the years 1995 and 2000.

By the end of 2001, most dotcom stocks had gone bust. Even the share prices of blue-chip technology stocks like Cisco, Intel and Oracle lost more than 80% of their value.

In the year 1995 most of the Investors poured money into internet startups  in the hope that those companies would one day become profitable and one day they will make a big profit out of it, but such things did not happened. The main criteria of the Investors was the .com domain i.e. the startup which were having the .com domains were having the only preference of the Investors.

Investors started investing in the Companies which were not having any proprietary technology. These companies spent all their money on marketing, to establish brands that would differentiate themselves from the competition.
The bubble that formed in the five years i.e. from 1995-2000 was fed by cheap money, easy capital, market overconfidence, and pure speculation.
Then in the 2001, some companies started failing, which was the starting of the dot com bubble burst. several of the leading high-tech companies, such as Dell and Cisco placed huge sell orders on their stocks, sparking panic selling among investors. This created a big problems in the shate market which was easily visible with great fall in the share market. Because of this, the companies that had reached market capitalization in the hundreds of millions of dollars became worthless within a matter of months. 
 

 

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