how the dotcom bubble burst
the 1990s was a period of rapid technological advancement in many areas but it was the commercialization of the internet that led to the greatest expansion of capital growth the country ever saw although high tech standard bearers such as intel cisco and oracle were driving organic growth in the technology sector it was upstart dotcom companies that fueled the stock market surge that began in 1995 the bubble that formed over the next five years was fed by cheap money easy capital market overconfidence and pure speculation venture capitalists anxious to find the next big score freely invested in any company with a com after its name valuations were based on earnings and profits that would not occur for several years if the business model actually worked and investors were all too willing to overlook traditional fundamentals companies that had yet to generate revenue profits and in some cases a finished product went to market with ipos that saw their stock prices triple and quadruple in one day creating a feeding frenzy for investors the nasdaq index peaked on march 10 2000 at 5 048 nearly double over the prior year several of the leading high tech companies such as dell and cisco placed huge sell orders on their stocks when the market peaked sparking panic selling among investors within a few weeks the stock market lost 10 of its value 13as investment capital began to dry up so did the lifeblood of cash strapped dotcom companies dotcom companies that reached market capitalizations in the hundreds of millions of dollars became worthless within a matter of months by the end of 2001 a majority of publicly traded dotcom companies folded and trillions of dollars of investment capital evaporated 1