The dot com bubble, also known as the dot com boom, was a period in the late 1990s when there was an uncontrolled speculation about internet-related companies. It was caused by the massive growth of the use of the internet, which led to a boom in the value of these companies. Many investors lost a lot of money during this time. Today, it is easy to see how the dot com bubble came about.
Why you Need to Know About the Dot Com Bubble
The most significant reason for the dot-com bubble to come about is that high-tech companies had no revenue and were therefore unprofitable. The failure of these companies’ business plans and inflated valuations contributed to the bursting of the bubble. Despite this, the dot-com industry continued to grow for years, and even benefited from the rise of the Internet. Whether or not these companies became profitable in the future is a very difficult question.
In the middle of the dot-com craze, the Federal Reserve System intervened. It lowered interest rates, encouraging more investors to invest in dot-com companies. It also lowered capital gains tax rates, which encouraged more liberal speculation in the dotcom sector. While the dot-com bubble shattered the economy, it did not destroy it. It is important to remember that this phenomenon was created by governments acting in their best interests.