Investors poured money into Internet startups during the s in the hope that those companies would one day become profitable, and many investors and venture capitalists abandoned a cautious approach for fear of not being able to cash in on the growing use of the Internet. How the Dotcom Bubble Burst The s was a period of rapid technological advancement in many areas, but it was the commercialization of the Internet that led to the greatest expansion of capital growth the country had ever seen. Although high-tech standard bearers, such as Intel, Cisco and Oracle were driving the organic growth in the technology sector, it was the upstart dotcom companies that fueled the stock market surge that began in
The number of U. Fifteen oil and gas companies filed for bankruptcy in the first quarter. Some oil producers appear to be holding on, hoping the price of crude stabilizes at a higher level.
Until recently, banks had been willing to offer leeway to borrowers in the shale sector, but lately some lenders have tightened their purse strings. A widely predicted wave of mergers in the shale space has yet to materialize as oil price volatility makes valuations difficult, and buyers balk at taking on debt loads until target companies exit bankruptcy.
The telecom and energy boom-and-bust cycles have notable parallels.
Pioneering technology brought an influx of investment to each industry, a plethora of new, small companies issued high levels of debt, and a subsequent supply glut sapped pricing just as demand fell sharply. Neither this crash nor the telecom crack-up in the early s rival the housing and financial bust in in terms of magnitude and economic impact.
But losses for energy investors in the stock and bond markets in the last two years are significant. It remains unclear how long it will take to get through the worst of the declines, and who will be left standing when it is over.
Oil and Gas Indexwhich tracks about 80 stocks. Telecommunications Sector Index in the early s. In the debt market, there are also signs that lots of money could be lost this time around, especially in high-yield bonds.
During its boom, U.Ten years after the crash, the dotcom boom can finally come of age In the internet bubble spectacularly burst, now technology has caught up with some of the ideas it spawned Richard Wray.
What was the 'Dotcom Bubble' The dotcom bubble was a rapid rise in U.S. equity valuations fueled by investments in Internet-based companies during the bull market in the late s.
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Figure 4. Telecommunications and high-stock indices vs.
Dow Jones Stoxx Europe – (2 January = ) In the five-year period before the peak of that boom, the DJS Europe Telecom Index beat the general DJS Europe Index by a factor of at the peak.
Fransman, M , The telecoms boom and bust, Puzzles, paradoxes, and processing. in E Bohlin, SL Levin, N Sung & CH Yoon (eds), GLOBAL ECONOMY AND DIGITAL. Boom and Bust in Telecommunications 1- The strategic plan adopted by level 3, Global crossing and networking failed due to several reasons.