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Pop goes the dot-com bubble on the stock market

The Story


After five years and many billions of dollars invested, the dot-com boom appears to have gone bust. As talk of a recession hangs over the U.S., the NASDAQ, the world's primary trading floor for technology stocks, is wrapping up its worst year ever. Canadian markets finished the year on a positive note, but that is little comfort to many worried investors who are paying a high price for their lofty expectations.

Medium: Television
Program: The National
Broadcast Date: Dec. 29, 2000
Guest(s): Derek Burleton, Patricia Croft, Mary Webb
Anchor: Suhana Meharchand
Reporter: Norman Hermant
Duration: 2:41

Did You know?


• The dot-com crash obliterated $5 trillion US in market value of technology firms between March 2000 and October 2002.

 

• In financial terms, a "bubble" refers to a situation where demand for a stock becomes so high that prices become inflated beyond any rational value for that commodity. Since bubbles are caused by speculation and overvaluing, they are not sustainable in the long term. Prices will eventually decline, huge sell-offs ensue and many investors take big losses - the bursting of the bubble.

 

• One of history's most famous bubbles was the South Sea Bubble, a huge inflation of stock prices in the English South Seas Company in 1720. The English government gave the group a monopoly on trade with Spanish colonies in South America and, as an attempt to stir up investor interest, allowed government creditors to exchange their claims for SSC stock. In this way, the company assumed nearly three-fifths of England's national debt. Between January and June of 1720, the stock price skyrocketed from £128 to £1,050 per share. The bubble burst and by September, share prices had shrunk to just £175. Many companies and individuals were ruined and the public outrage led to a parliamentary investigation that uncovered widespread fraud among politicians and company officials.

 

• NASDAQ stands for National Association of Securities Dealers Automated Quotations. 

 


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