![]() Following the 1929 crash, which affected all stocks even those that were very solid and financially sound, it took 25 years for the major index to get back to where it traded in 1929. Long droughts in the stock market aren’t only related to speculative areas like technology stocks (these are no longer speculative, but were at the time of the crash). Holding poor-performing stocks is a double whammy in that not only has the asset lost money, but it also costs time since that money could be doing something more productive…even sitting in a bank making 1%. Set a limit for who much you are willing to lose on a poor-performing investment. Most professional traders cut losses quickly because they don’t want to be stuck in a poor performing asset for years. That is a long time to hold a losing trade. Those that did hold on had to wait more than 16 years (give or take several years, depending on when they initially bought) to start seeing profits again. For many people who bought technology stocks, even a large basket of them, most of their capital was wiped out in the 2000 crash. The first lesson is that even buying a large basket of stocks, like an index, can carry significant risks. ![]() The technology bubble provides us with some important investing lessons. The Lessons of the 2000 stock market crash Most of the people who joined in on the buying frenzy were wiped out in the decline that followed, as the Nasdaq 100 fell all the way back to where it traded in 1997. They just knew that prices were soaring, people were getting rich, and they wanted to be involved. Many of these buyers likely didn’t even care what they were buying. As prices moved higher it attracted more people into the buying frenzy. Many investors mistakenly assumed that didn’t matter. Many of these companies had no earnings, and barely even a business model. No need to analyze a trade, just buy! The prevailing belief was that companies could continue to grow profits via the ever-expanding reach of the internet and the increased efficiency it (potentially) provided. Internet-based companies were popping up all over the place, and investors viewed the internet as a new frontier–a game changer–where old rules of investing didn’t apply. What drove the stock market higher, and in particular the tech companies stocks that everyone was so eager to own, is well documented and isn’t complex to understand. The Causes of the 2000 stock market crash It took more than 16 years, not until mid-2016, for the Nasdaq 100 to exceed the March 2000 highs. Nasdaq 100 During Tech Bubble and 2000 Stock Market Crash The price rallied from that point onward, with the next peak occurring at 2239.23 prior to the 2008 crash. While there were intermittent bounces higher in price, ultimately the index continued dropping until hitting a low 795.25 in October of 2002. In November the technology-heavy index broke below the May low and continued to slide lower. The index remained above that low until November yet was never able to get close to the former high. The buying continued into early 2000, when the Nasdaq 100 index peaked at 4816.35 in March.īy May, the index collapsed to a low of 2897.27, a decline of 39.8%. The upward trajectory remained in place through 1999, with a sharp rising occurring late in the year. Prices were already rising in the mid to late-90’s, but buying accelerated in late 1998. Like all major crashes, prices first rose then fell. The “Tech bubble”, and resulting stock market crash, which began in 2000 and continued until 2002, is also known as the Dotcom bubble, Dotcom crash, Dotcom boom, internet bubble, and 2000 stock crash. Also, learn the causes of the crash and the lessons it left us with. Learn the history of the 2000 stock market crash, goes also by the name of “dot com bubble” or the “bubble burst”, when technology stocks declined 83%. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. While our reviews and assessments of each product on the site are independent and unbiased, brands may pay to appear higher up our table rankings or place ads in specific areas of the site. In order to fund our work, we partner with advertisers who compensate us for users that Invezz refers to their services. Invezz is an independent platform with the goal of helping users achieve financial freedom.
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