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Will the Internet craze lead to a stock market crash? (When you learn the story of the ‘dotcom’ bubble, you say nothing!)

  • May 27, 2024
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In the early 1990s, the internet was the future like a gold mine was seen and with the spread of the internet, large sums of money were invested

Will the Internet craze lead to a stock market crash?  (When you learn the story of the ‘dotcom’ bubble, you say nothing!)

In the early 1990s, the internet was the future like a gold mine was seen and with the spread of the internet, large sums of money were invested in this field and many internet based businesses started to emerge.

Entrepreneurs doing business in this area were seen as explorers in the new digital world. with a “.com” extension and “dotcom companies” The names of the companies known as A.Ş graced the headlines and their success stories were told on television programs.

However, within this magical world that affected everyone, there was a danger that not everyone could see.

It didn’t take long for interest in the Internet to become a craze. extremely fast growth It also meant great danger, but the magic of the digital world had affected everyone.

Special Between 1995 and 2000investments in ‘dot-com’ companies reached astronomical levels.

Don’t think we’re exaggerating when we say it’s crazy. Each without even a business plan companies could raise millions of dollars in financing.

Many Internet companies have raised significant capital through public offerings.

People had great confidence in the future of the Internet and there were many companies that would be active in this field. every business will be successful The belief became widespread.

Company valuations have risen rapidly and investors have bought these stocks in the hope of making huge profits. invested.

The media also had a major influence Naturally. Any development related to the revolutionary Internet was considered news. This caused more investors to enter this market.

In the 2000s, the bitter truth came to light and investor confidence was shaken.

Many of the “dotcom” companies are receiving investment There was no solid business model and they could not make sustainable profits.

The emergence of this fact has deeply shaken investor confidence in the Internet and caused a decline in this sector. broke their beliefs.

Thus began the panic selling, which is one of the first steps of a crisis.

Among investors who try to sell their shares quickly to avoid bigger losses wave of panic There was.

The sales caused stock prices to fall even further. Due to sudden price drops in the market The NASDAQ stock market crashed.

This situation is a lot The collapse of the ‘dot-com’ business and resulted in many investors losing their investments.

In summary, the ‘dot-com’ bubble, one of the most important events in investment and economic history, occurred at a time when technology was developing rapidly. By not getting caught up in this kind of madness It emphasizes the importance of being more aware.

Source: Goldman Sachs, Institute for Corporate Finance

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