BUBBLE SPOTTING SERIES - 2014

QUICK SUMMARY FORMAT
This short presentation on the Dot.Com Bubble forms part
of a larger series of presentations on Market Bubbles

Front page...
BACKGROUND
The Microsoft Windows Operating
System ™ (launched in 1985), opened up
new opportunities in personal
computing....
During this period, significant
investments were made in the
software development industry,
notably in the usa. Software w...
Hardware manufacturing on the other
hand, was being taken over by Asian
companies who could compete
competitively on price...
Many new start-up companies were
formed, buoyed by low interest rates
between 1998–99. Everybody wanted
to be the next Mic...
This attracted the attention of
venture capitalists. Their strategy
was to finance, take these start-ups
public and, hopef...
As a result of the economic boom,
Economists started speculating that
the world had entered a “new
economy”, and that “old...
Start-ups were measured on their
burn-rate: how long it would take to
burn through (different rounds of)
seed capital befo...
Many start-up companies were run by
individuals barely out of college. Many
start-ups (or their management) had
No real Tr...
Many start-ups went through several
stages of funding before either
turning profitable or finally going
bankrupt.
Between 1996 to 2000, NASDAQ stock
index exploded from 600 to almost
5,000 points. In 1999, there were 457
IPO’s, most of ...
Between 1999 and early 2000, the U.S.
Federal Reserve increased interest
rates 6 times in an attempt to cool
down the econ...
On 9 March 2000, the NASDAQ
peaked at 5,048.62,
but from
10 March 2000 proceeded to
drop 10% over the next 10 or so days.
Barron’s magazine shocked the market
by publishing a story (“Burning Up“ MONDAY,
MARCH 20, 2000) that indicated the end wa...
In subsequent months, many companies
reported huge losses and some folded
within months of listing. Various
accounting and...
BY 2001 the number of IPOs had slowed
to 76, - none of which doubled on the
first day of trading.
Reality started setting in. Within
months after peaking, Nasdaq lost
78% of its value (top to bottom).
* As per the International monetary
fund - which corresponds with the
value by which American households’
equity holdings ...
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Dot.com bubble
http://www.thebubblebubble.com/dot-combubble/
http://www.investopedia.com/terms/d/dotco
m-bubble.asp
http:/...
This presentation is provided in the sake of public interest, and has been compiled based on
publically available informat...
Bubble Spotting - The DotCom bubble (NASDAQ crash Mar 2000)
Bubble Spotting - The DotCom bubble (NASDAQ crash Mar 2000)
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Bubble Spotting - The DotCom bubble (NASDAQ crash Mar 2000)

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Between 1996 to 2000, NASDAQ stock index exploded from 600 to almost 5,000 points. Money flowed like water in Silicon Valley. In 1999 there were 457 IPO’s.

And then one day the DotCom bubble popped

This short presentation gives an overview - you can also head over to my blog and read a bit more on http://bubblespotting.blogspot.com/

Published in: Economy & Finance, Business
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Bubble Spotting - The DotCom bubble (NASDAQ crash Mar 2000)

  1. 1. BUBBLE SPOTTING SERIES - 2014 QUICK SUMMARY FORMAT
  2. 2. This short presentation on the Dot.Com Bubble forms part of a larger series of presentations on Market Bubbles Front page graphic - own
  3. 3. BACKGROUND The Microsoft Windows Operating System ™ (launched in 1985), opened up new opportunities in personal computing. This lead to significant growth in number of PC’s, further buoyed by internet access in 1992, which caused pc usage to grow exponentially. wired.com
  4. 4. During this period, significant investments were made in the software development industry, notably in the usa. Software was seen a highly profitable investment and software development companies were strong performers on the stock exchange. wired.com
  5. 5. Hardware manufacturing on the other hand, was being taken over by Asian companies who could compete competitively on price and quality. wired.com
  6. 6. Many new start-up companies were formed, buoyed by low interest rates between 1998–99. Everybody wanted to be the next Microsoft.
  7. 7. This attracted the attention of venture capitalists. Their strategy was to finance, take these start-ups public and, hopefully, reap massive profits in the process.
  8. 8. As a result of the economic boom, Economists started speculating that the world had entered a “new economy”, and that “old economy” concepts like corporate earnings and other traditional financial criteria was maybe not as important to internetbased businesses anymore.
  9. 9. Start-ups were measured on their burn-rate: how long it would take to burn through (different rounds of) seed capital before being profitable, and on their ability to expand their customer base (regardless of cost).
  10. 10. Many start-up companies were run by individuals barely out of college. Many start-ups (or their management) had No real Track Record , NO profit HISTORY to speak of, BUT were raising millions of Dollars in IPO’s due to public excitement AND MEDIA HYPE.
  11. 11. Many start-ups went through several stages of funding before either turning profitable or finally going bankrupt.
  12. 12. Between 1996 to 2000, NASDAQ stock index exploded from 600 to almost 5,000 points. In 1999, there were 457 IPO’s, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading (due to hype).
  13. 13. Between 1999 and early 2000, the U.S. Federal Reserve increased interest rates 6 times in an attempt to cool down the economy.
  14. 14. On 9 March 2000, the NASDAQ peaked at 5,048.62, but from 10 March 2000 proceeded to drop 10% over the next 10 or so days.
  15. 15. Barron’s magazine shocked the market by publishing a story (“Burning Up“ MONDAY, MARCH 20, 2000) that indicated the end was near "During the next 12 months, scores of highflying Internet upstarts will have used up all their cash”
  16. 16. In subsequent months, many companies reported huge losses and some folded within months of listing. Various accounting and other irregularities were identified.
  17. 17. BY 2001 the number of IPOs had slowed to 76, - none of which doubled on the first day of trading.
  18. 18. Reality started setting in. Within months after peaking, Nasdaq lost 78% of its value (top to bottom).
  19. 19. * As per the International monetary fund - which corresponds with the value by which American households’ equity holdings had declined (44 %)
  20. 20. LIKED THIS PRESENTATION? Tell a friend - ”Like” or “tweet” this presentation now
  21. 21. Dot.com bubble http://www.thebubblebubble.com/dot-combubble/ http://www.investopedia.com/terms/d/dotco m-bubble.asp http://www.moneycrashers.com/dot-combubble-burst/ http://www.businessinsider.com/heres-whythe-dot-com-bubble-began-and-why-it-popped2010-12 http://www.scaruffi.com/politics/sv.html http://www.cnet.com/1990-11136_1-62783871.html http://www.imf.org/external/np/seminars/e ng/2012/fincrises/pdf/ch12.pdf http://www.cnet.com/1990-11136_1-62783871.html http://www.cnet.com/1990-11136_1-62783871.html http://thenextweb.com/entrepreneur/2011/1 0/27/17-dot-com-failures-and-their-moderncounterparts/#!qzNFE http://en.wikipedia.org/wiki/Dot-com_bubble Also See Irrational Exuberance - Robert Shiller Extraordinary Delusions and the Popular Madness of Crowds - Charles Mackay
  22. 22. This presentation is provided in the sake of public interest, and has been compiled based on publically available information sources on the web. While great care has been taken in the preparation and compilation of information indicated here, the author does not accept any legal or other liability for any inaccuracy, mistake, misstatement or any other error of whatsoever nature contained herein. This presentation is not investment advice, not a solicitation for any type of investment, financial or otherwise, nor is this presentation an opinion expressed on, nor endorsement of markets, commodities or investments. Any names, trademarks and images are copyright their respective owners and rights in the graphic artwork and photos used in this presentation belongs to, and are courtesy of the respective owners thereof. Unless where otherwise indicated, I don’t claim to have any rights therein.

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