The dot-com Crash (also known as dot-com bubble or I.T. Bubble) refers to the market fluctuation which was occurred in between 1995 – 2001 (with a climax on March 10, 2000 with the NASDAQ peaking at 5132.52).

The computer industry has its own different cycle just like any other industries. In the early days of 50s to the mid 70s mainframes computers from IBM and DEC was in use as a corporate-machines which was used mainly by the specialists of large organizations. On those days each large corporation used to have one corporate machine (i.e. mainframes computer) as large as a room which were used for critical applications, bulk data processing and statistics. Later on when Personal Computers were developed with a new approach “a stand-alone computer on a desk, used by an individual” the market begin to grow. MS-DOS was developed by Bill gates with his colleague. With these development and new possibilities, new companies were born. More jobs have been created.

The release of Windows 95 with largest media coverage, commercial usages of Internet, and the huge interest & demand on computers and internet based services between 1995 leads on creating a totally new market which is meant for internationally. Investors wanted to implement big ideas with big investments so that they can use the new market and can get big profits without taking care of solid business plan. Networking, Information Technology, Internet, Web and similar buzzwords begin to be featured on media which makes investors much more hunger for the investment on those businesses. Venture Capitalists begin to invest billions of dollars per month blindly on every new issue without even looking at a business plan.

Dot-com Bubble

The technology-heavy NASDAQ Composite index peaked at 5,048 (intra-day peak 5,132.52) in March 10 2000, reflecting the high point of the dot-com bubble.

By the mid 1998 almost every MBA Graduates at America either worked at .com Company or was thinking to start their own company because of the unbelievable growth on the field. Venture Capitalists had seen thousands of new business ideas every day. Dot-Com business was growing rapidly. Millions of commercial sites were developed. There were dozens and more identical competitors for the same business idea (pets.com, petsmart.com, petfood.com, petstuff.com, petopia.com, and so on.) and the fast increase in stock value makes Investors decide to buy in expectation of further rises, rather than because the shares are undervalued. And due to that many company become grossly overvalued. The technology-heavy NASDAQ Composite index peaked at 5,048 (intra-day peak 5,132.52) in March 10 2000, reflecting the high point of the dot-com bubble.

The investment without taking care of the business plan is obviously a big problem and the result came from the companies themselves resulting on huge losses. Most of the dotcoms were closed and most become bankruptcy. That leads on heavy fall down on NASDAQ and all dotcoms. This hadn’t only affected the dotcoms business but it also destroyed the businesses that support the dotcoms (web design, ad agencies, photographers, graphics designers etc), personal services and tertiary economy.

Notes:
NASDAQ (Acronym of National Association of Securities Dealers Automated Quotations): An American stock exchange.

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