What cause the dot com bubble? Why did it crash and empire loose money.?
Also, if folks bought during the IPO, did they come out winner?
Answers:
A speculative bubble occur when the price of a stock or group of stocks rises all right above it's long-term intrinsic worth. This can come about when irrational exuberance grab hold.
There are a few imaginative conditions that crop up during a speculative bubble:
1) Some bright technology comes out that grab general public's attention. In this defence, it be the internet and internet-based businesses.
2) Easy access to credit. Low interest rates. This encourage speculators to buy stocks on outside edge.
3) It have be a long time since the final speculative bubble and crash (the 1973-74 crash, within this case). Basically, respectively social group get burned by one, and the closing equals have moved on. The gray-haired learned investors be not around to tip off the newbees.
4) A capture of the flea market by inexperienced, brand new investors who did not read the fundamentals of a stock. They threw out tried and true valuation of stocks. They forgot in the region of things such as PE ratio and the price to book ratio. They begin justifying any price for these stocks, regardless of the certainty that heaps of these companies have not even posted a valid profit.
Usually the pricking of a bubble is cause by a sudden increase in interest rates or drying up of the credit. Then, speculators who bought on outside edge must fast go their stocks to come upon their outside edge call, which commence to verbs the convenience of the souk down. Other investors see this drop and panic-sell in response.
A stock can simply rise above it's intrinsic merit for a term of time. Eventually ancestors will come to their senses and realize that they own overpaid. Then, they will fast vend to try to unload formerly everyone else realize this.
In the long run, the fundamentals of the cutback and the companies drive stock returns. Speculative influence wax and wane and tend to revoke itself out over several decades. Hence, the creation of "The Gordon Equation" which states that long-term stock returns are equal to the Divident Yield + Growth of Dividends. Suprisingly, long-term stock returns are explained by this relatively simple math equation. This Gordon equation have be back-tested and have worked EVERY single time when looking at 30-year flea market returns. The Gordon Equation predicts that the stock flea market will supply nominal returns of 7 - 8% over the subsequent 30 years ... much lower than the oft-quoted 10% return.
I own a discussion of speculative bubbles within chapter 5 of my free book at http://www.invest-for-retirement.com...
Speculation and "marketing" cause it. People followed the crowd thinking these companies be going to get adjectives this money. The prices be not supported by profits/earnings. If they get within at IPO, it depends when they get out and what company it be whether they made money.
Are You Talking almost any bubble team game. If you are discussion something like bubble hobby mechanism it is beneficial purely for advertisers. We must hang about for long time to win in that. Please see the settings of bubble who won.
There be over-speculation minus any definite way to assert the cost of the stock.
1) Tulipmania
2) Because Yahoo! is not more influential than EVERY NEWSPAPER surrounded by the United States of America. (Back surrounded by 2000 you could buy every tabloid within the United States of America if you go adjectives the shares of Yahoo!)
If you bought Yahoo!, G00GLE, Amazon, Ebay, Expedia and others at the IPO afterwards you are very soon a Chamillionaire.
In travel case you are wondering.
Yahoo! supply ad.
Newspapers trade ad.
Why is DOW losing so much money?
What's the best approach to invest $20,000 for a monthly return?
I hold lb25000.00 to invest?
Now that the Feds are keeping interest rates at 5.25%?
What moves a stock price?
Answers:
A speculative bubble occur when the price of a stock or group of stocks rises all right above it's long-term intrinsic worth. This can come about when irrational exuberance grab hold.
There are a few imaginative conditions that crop up during a speculative bubble:
1) Some bright technology comes out that grab general public's attention. In this defence, it be the internet and internet-based businesses.
2) Easy access to credit. Low interest rates. This encourage speculators to buy stocks on outside edge.
3) It have be a long time since the final speculative bubble and crash (the 1973-74 crash, within this case). Basically, respectively social group get burned by one, and the closing equals have moved on. The gray-haired learned investors be not around to tip off the newbees.
4) A capture of the flea market by inexperienced, brand new investors who did not read the fundamentals of a stock. They threw out tried and true valuation of stocks. They forgot in the region of things such as PE ratio and the price to book ratio. They begin justifying any price for these stocks, regardless of the certainty that heaps of these companies have not even posted a valid profit.
Usually the pricking of a bubble is cause by a sudden increase in interest rates or drying up of the credit. Then, speculators who bought on outside edge must fast go their stocks to come upon their outside edge call, which commence to verbs the convenience of the souk down. Other investors see this drop and panic-sell in response.
A stock can simply rise above it's intrinsic merit for a term of time. Eventually ancestors will come to their senses and realize that they own overpaid. Then, they will fast vend to try to unload formerly everyone else realize this.
In the long run, the fundamentals of the cutback and the companies drive stock returns. Speculative influence wax and wane and tend to revoke itself out over several decades. Hence, the creation of "The Gordon Equation" which states that long-term stock returns are equal to the Divident Yield + Growth of Dividends. Suprisingly, long-term stock returns are explained by this relatively simple math equation. This Gordon equation have be back-tested and have worked EVERY single time when looking at 30-year flea market returns. The Gordon Equation predicts that the stock flea market will supply nominal returns of 7 - 8% over the subsequent 30 years ... much lower than the oft-quoted 10% return.
I own a discussion of speculative bubbles within chapter 5 of my free book at http://www.invest-for-retirement.com...
Speculation and "marketing" cause it. People followed the crowd thinking these companies be going to get adjectives this money. The prices be not supported by profits/earnings. If they get within at IPO, it depends when they get out and what company it be whether they made money.
Are You Talking almost any bubble team game. If you are discussion something like bubble hobby mechanism it is beneficial purely for advertisers. We must hang about for long time to win in that. Please see the settings of bubble who won.
There be over-speculation minus any definite way to assert the cost of the stock.
1) Tulipmania
2) Because Yahoo! is not more influential than EVERY NEWSPAPER surrounded by the United States of America. (Back surrounded by 2000 you could buy every tabloid within the United States of America if you go adjectives the shares of Yahoo!)
If you bought Yahoo!, G00GLE, Amazon, Ebay, Expedia and others at the IPO afterwards you are very soon a Chamillionaire.
In travel case you are wondering.
Yahoo! supply ad.
Newspapers trade ad.