Internet Bubble

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An economic bubble is an event in which there is a rush into the market. The rush is caused by speculation regarding a commodity or asset, which results in a boom. The activity within the specific industry get impacted by the over inflation of prices in the market. The price of the stock are not sustainable since they are temporary due to the over inflation value which leads the market to crash on the specific sector. Bubbles do not follow the fundamental supply and demand laws. It is safe to say that bubbles have rising prices, which attracts major attention of people who are interested in getting rich quick. Investors pour money, which inflates the price way beyond the sustainable value. A boom can be easily compared to the traditional business cycle with no recovery in the recession stage. Right before the new millennium (2000’s), many people thought that we were having a “new economy”. A new economy is related to the extraordinary growth of the technology industry. The technology industry had rapid growth, which made communication and e-commerce much easier than before. The internet bubble had risen rapidly, which caused the speculation of online-based companies. Investor’s and people with ideas were in search for the next biggest thing. People in every sector had left their jobs just to be a part of the internet bubble by opening their own internet-based company. Areas such as Silicon Valley in California, which is known for its technology innovation was an area with a major part of the internet bubble. Companies all over the United States were being formed in their garage or basement overnight by the hundreds. Many online-based companies were started with an idea without any funding. Friends and family members are approa... ... middle of paper ... ...problems arise at home due to the imbalancement between work and family or with the personal friendship of the management team which reduces the overall productivity of the team. However, sometimes lessons will never be learned as well as some will be mastered. In the current market we are in today, investors and analysts believe that we are in a internet bubble 2.0 with the social media aspect. Many companies again are not benefiting on past data and lessons learned by other people’s mistakes. Companies with great business plan ideas like Twitter and Facebook, have been overvalued with numerous stock investments with the company having no practical way of generating cash for the company. Again, the investors are using investing based on popularity. However, only time will tell until the next bubble will burst with us having made a bad or good investment decision.

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