Dotcom bubble -Simple Explanation [Video]

#dotcom #bubbleburst #wallstreetmojo #markets #stockmarkets

This video is about Dotcom bubble burst in the US financial markets in year 2000. Why did this happen, and how did this happen? You’ll find all answers in this video.
Chapters:
00:00 – Introduction
00:47 – What is dotcom bubble?
01:30 – Why did the bubble burst?
01:50 – What caused the dotcom bubble, what was the internet startup craze before Dotcom burst of 2000?
02:35 – What do we mean by Herd mentality?
03:10 – What speech did Alan Greenspan gave that was a reason for dotcom burst?
03:43 – What was Taxpayer relief act, 1997?
04:19 – What happened during bubble crash?
04:44 – What happened after year 2000 bubble burst?
05:37 – How can we avoid having similar situation like Dotcom bubble burst of Year 2000?
07:07 – Conclusion
(Explained in detail in the video)
Dotcom bubble crash in year 2000 was so brutal that the Nasdaq Composite Index went from $5100 to $1100, wiping out all the gains it had made over the years.
(Explained in detail in the video)
What was the dotcom bubble?
By the mid ‘90s, many internet companies came up, and things looked pretty good.
The valuation of these internet companies had shot up by 400%.
the Nasdaq Composite Index price went from a mere $320 to $5100 in just a decade.
(Explained in detail in the video)

But then something happened in 2001 that all these companies, whose futures were looking bright, had their share prices crash by almost 80%.

Why did the bubble burst?
So with the prices going up and up year after year, a sort of bubble was created, and the internet companies were at the center of it.
(Explained in detail in the video)
Eventually, the overly inflated prices had to come all the way down, and the bubble had to burst.
(Explained in detail in the video)
How it happened:
1. Starting up craze (Explained in detail in the video)
2. Herd mentality: People following others without giving it a proper thought.
(Explained in detail in the video)
3. Alan Greenspan the then chairman of the US Federal Reserve, gave a speech that this internet hype was creating a bubble

4. Taxpayer relief act, 1997

(Explained in detail in the video)
5. The crash
It took ten years for the price of the Nasdaq Composite Index to go from $300 to $5100, but it only took two years to crash from $5000 to $1100.
(Explained in detail in the video)
6. Aftermath
During the bull trend, the valuation of almost every company was just soaring through the roof.
After the crash, many companies went bust.
The dotcom crash even caused a mild recession in the US at that time.
(Explained in detail in the video)
How can you avoid getting crashed?
There are two things that you can do to save yourself from such a bloodbath:
1. Accept negative outcomes
2. Don’t fall for the hype
So, this was all about market crashes and the dotcom bubble in particular.
(Explained in detail in the video)
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