The Dot Com Bubble is a fascinating foray into supply, demand, and tech hysteria. As the name suggests, the Bubble started as a wave of mass investment. Simply put, investors purchased shares of newly formed web-based companies. These investments were not necessarily prompted by sound business models or impressive sales, but simply because of the excitement surrounding the boom of the World Wide Web (WWW). I mean, at least one business had to succeed right?

Impressionable investors paid significantly more for WWW-based stocks than they were actually worth. As a result, initial public offerings (IPOs) were heavily inflated. For example, when Netscape Communications corporation made an IPO, it closed its stock at $58.25, valuing the company at $2.9 billion. Overall, the National Association of Securities Dealers Automated Quotations (NASDAQ) saw growth from 1995 where it had 1000 points to around 5000 points in 2000.

The eponymous Bubble itself came from the result of all these investments. The difference between the investor’s perceived value of a Dot Com company and the actual income generated from these companies created a market bubble. In short, colossal amounts of money being invested in web-based companies that couldn’t return the expectations created a system that was not sustainable. The bubble would eventually have to “pop”.

And early in March of 2000, the bubble did indeed finally burst. The NASDAQ has lost over two-thirds of its value near the end of 2002. Hundreds of web-based companies lost value, such as 360networks, Inc., Broadband Sports, and Freei. However, not all companies went defunct. Notable players in today’s industry survived the bubble burst. These include Amazon and Ebay, which were able to raise billions of dollars leading up to the bubble pop.

Today, new economic bubbles are emerging-  student loan debt, federal debt, and unfunded state pension liabilities. Time will tell if investors have learned their lesson, or if companies will become more creative in mystifying new industries.