🔹 I. Background: Tech Dreams & Wealth Illusions (1995–1999)
The Tech Revolution Begins: In the mid-1990s, internet technology advanced rapidly. Companies like Microsoft, Yahoo, Amazon, and Cisco saw their market caps soar.
Retail Investor Frenzy: Internet companies went public despite being unprofitable, often without even a viable product. Retail investors, hyped by the “New Economy” narrative, flooded into the market.
Media Hype: Financial media like CNBC constantly promoted the “next Amazon,” creating a national stock-buying frenzy. Even taxi drivers and homemakers were investing in tech stocks.
Low Interest Rates + Easy Money: The Federal Reserve maintained low interest rates, and capital flowed freely into equities.
🔹 II. Mania Phase: 1999 to Early 2000
NASDAQ Skyrockets: The NASDAQ gained 86% in 1999, reaching over 5,000 points by March 2000 — a more than threefold increase in three years.
“.com” IPO Frenzy: In 1999 alone, over 300 internet companies went public in the U.S. Most had no profits — some didn’t even have real products.
Retail Investors Leveraged In: Many used margin accounts, credit cards, and even sold homes to buy “dot-com” stocks.
🔹 III. Peak & Collapse: March 2000
Valuation Bubble Bursts: On March 10, 2000, the NASDAQ peaked at 5048 and began to plummet.
Big Money Pulled Out: Institutional investors began to exit first, drying up liquidity. Retail investors were left trapped.
Sentiment Flipped: Former tech darlings began reporting losses. Market confidence quickly turned to panic.
🔹 IV. Full Meltdown: 2000–2002
NASDAQ Crash: From its peak, the NASDAQ fell by over 78%, bottoming around 1100 points.
Mass Retail Blowups: Many retail traders were wiped out, unable to cut losses. Entire life savings and retirement funds were erased.
Massive Company Failures: Over 90% of the hyped dot-com companies eventually went bankrupt.