Dot-com

Dot-com (also dotcom or redundantly dot.com) companies were the collection of start-up companies selling products or services using or somehow related to the Internet. They proliferated in the late 1990s dot-com boom, a speculative frenzy of investment in Internet and Internet-related technical stocks and enterprises. The name derives from the fact that many of them have the ".com" TLD suffix built into their company name.

Soaring stocks

A stock market bubble in financial markets is a term applied to a self-perpetuating rise or boom in the share prices of stocks of a particular industry. The term may be used with certainty only in retrospect when share prices have since crashed. A bubble occurs when speculators note the fast increase in value and decide to buy in anticipation of further rises, rather than because the shares are undervalued. Typically many companies thus become grossly overvalued. When the bubble "bursts", the share prices fall dramatically, and many companies go out of business.

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The late 1990s boom in technology dot-com company stocks is a good example of a bubble, which burst in late 2000 and through 2001.

Related Topics:
1990s - 2000 - 2001

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The dot-com model was inherently flawed: a vast number of companies all had the same business plan of monopolising their respective sectors through network effects, and it was clear that even if the plan was sound, there could only be at most one network-effects winner in each sector, and therefore that most companies with this business plan would fail. In fact, many sectors could not support even one company powered entirely by network effects.

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In spite of this, vast fortunes were made by a few company founders whose companies were bought out at an early stage in the dot-com stock market bubble. These early successes made the bubble even more buoyant. An unprecedented amount of personal investing occurred during the boom. Stories of people quitting their jobs to become full-time day traders, while not representative, were common in the press.

Related Topics:
Buoyant - Day traders

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