This website uses cookies to ensure you have the best experience. Learn more

Internet Bubble Essay

2155 words - 9 pages

An economic bubble is an event in which there is a rush into the market. The rush is caused by speculation regarding a commodity or asset, which results in a boom. The activity within the specific industry get impacted by the over inflation of prices in the market. The price of the stock are not sustainable since they are temporary due to the over inflation value which leads the market to crash on the specific sector. Bubbles do not follow the fundamental supply and demand laws. It is safe to say that bubbles have rising prices, which attracts major attention of people who are interested in getting rich quick. Investors pour money, which inflates the price way beyond the sustainable value. A ...view middle of the document...

They would present their business plan and from the venture capital group, that is when ideas are rejected or accepted, in which they can get a lump sum of cash. The way the venture capital groups make their money back is by taking the company public with an Initial Public Offering (IPO) or if a bigger company buys them out. If the company went public, money would flow in from investors with an exchange of company stock. In general terms, when investors buy many shares of a company, the stock price increases. Venture capital groups became less cautious when making a decision on someone else’s idea during this time. The venture capital groups did not let the actual market choose which company would survive since the market was growing rapidly but there decision was based on speculation. Many people just kept buying shares of stock simply because just wanted a share of the action. People also had a theory of buying shares based on the company’s name. If the company had a .com, cyber, or info they invested in it because they believe it had something to do with the internet. Investing in that matter is referred to as prefix investing. When many people follow that principle, the company gets over valued and at some point, the tables will turn with the stock crashing and people selling their shares to get out.
One of the many factors before the internet bubble had started was the government made changes with the tax codes and interest rates for the public. One law that took place before the internet bubble was the Taxpayer Relief Act of 1997. The Taxpayer Relief Act’s main purpose was to balance out the US budget as well as make huge change to the economic policy of the government. There were many provisions that helped the public. From all different types of tax credits to even people, being placed in lower tax brackets overall. Capital gain deals with an increase in value of a investment or real estate. Capital gains are easily explained by the phrase “buy low sell high”. Capital gains in term of the act had major tax rate reduction. From being taxed at the normal 28 percent, people were tax at the 20 percent rate only if you held that investment longer than 18 months. The government put duration of time so people would not “flip” investments quickly left and right. With the capital gains tax rate reduced, people essentially placed in lower tax brackets. However, the people who got the most benefit from the reduction were taxpayers in the highest tax bracket. Regarding dividends, the tax rate at which they were tax at were at the personal tax rate. So therefore, we have capital gain being taxed at a lower rate than dividends. A couple of years later, congress released the Job and Growth Tax Relief Reconciliation Act of 2003, with changed dividends and capital gains rates by making them equal as they were previously. As the tax codes were being changed, the Federal Reserve made a change themselves regarding interest rates. From a yearly average...

Find Another Essay On Internet Bubble

Internet: The Objectivity of Search Engines

2476 words - 10 pages : What the Internet is Hiding from You. London:Viking. Toch,E., Wang, Y., Cranor, L.(2012). Personalization and privacy: a survey of privacy risks and remedies in personalization-based systems. User Modeling and User-Adopted Interaction. 22. 203-220. Van Dijck,J. 2011, Facebook as a Tool for Producing Sociality and Connectivity. Television and New Media,13(2).160–176. Will Heaven (2011, 21st of June)The ‘filter bubble’ is a sinister phenomenon. But

Dot com crisis Essay

1243 words - 5 pages Shakeout in 2000 by Elizabeth Demers & Baruch Lev (PDF), The Internet Bubble (New York: HarperCollins 1999) by Anthony Perkins & Michael Perkins, The Coming Internet Depression: Why The High-Tech Boom Will Go Bust ... (New York: Basic Books 2000) by Michael Mandel and Big Deal (New York: Warner 1998) by financier Bruce Wasserstein.behavioural financeIn February 2003 - some time after the bubble burst - had a market

A Random Walk Down Wall Street Book Analysis

2828 words - 11 pages helped me reach my goal when enrolled in the simulation game. I found a number of arguments that I agree on and disagree on that I want to share with you. These arguments derive from topics and chapters that I selected out of the text of the book. The sections that I found most interesting include; The South Sea Bubble, The Japanese Yen for Land and Stocks, The Internet Bubble, Technical and Fundamental Analysis, and Greater Rewards by Increasing

Bubbles in stock markets

1586 words - 6 pages irrational behaviour, to some extent, helped to cause the IT bubble, I will begin by looking at possible rational explanations and whether they alone can explain the dotcom boom and bust. Then, I will see how irrational behaviour could have contributed.      Some Simple Background Facts      The mainstream introduction of the Internet in 1997 can be compared to the introduction of televisions and

Endangered Species: The Physogyra Lichtensteini

1163 words - 5 pages school and other schools. Social media is a great outlet to get or message across. In America for every 100 humans 81 of them use the internet. Technology is a big part of the modern day world and our class could utilize it to benefit the endangered species. In order to reverse the threat on the Physogyra lichtensteini we must do something to help. The trade of the pearl bubble coral needs to be banned and a effort should be made to catch

Internet Governance

2166 words - 9 pages , and other resources linked by an abstract web of hypertext links and URLs).By the late 1990s, the internet/web had taken off and much capital was being invested into its development, thus creating the booming American economy and tech bubble that ultimately burst with the Sept. 11, 2001 terrorist attacks. The NASDAQ stock composite, a tech-heavy stock exchange, had reached its all-time high of 5132.34 in March 2000. Many new improvements of the

Bitcoin as a New Exchange Medium

770 words - 4 pages bought with it varying from candies to cars. After this virtual currency is getting more widely used by merchants, the value is getting more stable (Nytimes, 2014). On the early 2013s, Bitcoin’s price rose from roughly thirteen to one thousand dollars. Its price bubble is one of many reasons why Bitcoin is the new trend for investing money. It is true that the price of Bitcoin is getting stable this time around. However, skyrocketed from

How Investing Became Cool

1537 words - 6 pages even be considered cool now. The 1990s saw the climax of the longest bull market in recent history. As John Cassidy pointed out in an article for the New Yorker earlier this year, interest rates were low, unemployment was low, and thanks to the Internet bubble the Nasdaq was climbing at an unbelievable rate. To the average American, it started to become apparent that the stock market was a good place to turn to make a quick and easy profit

Financial paper

1392 words - 6 pages the internet bubble burst in 2001, a lot of Americans felt that buying a house was a safer investment than invested in the stock market. Due to poor saving habits, low income homeowner was unable to pay the typical twenty percent down payments on a house. (Paul Muolo, 2008) Mortgage lenders introduced the Subprime loan as an alternative for homebuyers who did not meet the credit and the down payment requirement for a prime mortgages loans. By

Affiliatae marketing

853 words - 4 pages unparalleled effect that internet had on commerce can be very well understood by studying the industrial and economical growth in late 90s, this period of high economic growth is referred to as “The .com bubble”. It won’t be wrong to say that internet made a million millionaires. Anyone can benefit from the untapped potential of services that internet has to offer. With a bit of effort, knowledge and right attitude, anyone can earn a decent

Brick and Mortar versus Electronic Business

1088 words - 4 pages internet is not the best of mediums for some companies and during the internet bubble in the earlier part of the 21st century, there were many internet companies that went bankrupt. Home Depot has been able to increase the emphasis of their web site at the pace needed to keep both the physical store front and the online storefront afloat (Gogoi, 2006).Anytime a company is about to implement something new within an organization they typically look

Similar Essays

Rise And Fall Of The World Wide Web

1062 words - 5 pages Reserve increased interest rates and the economy began to lose speed. On March 10th 2000 NASDAQ index of leading technology shares spiked bursting the Dotcom bubble (Madslien). NASDAQ had lost more than ten percent from its peak. Internet companies weren’t doing so good and were not very profitable and some of the new companies had no intention of ever making a profit. Companies that were selling products and services on the web were not meeting sales

Scholarship Poster Essay

816 words - 4 pages When I think about creating tomorrow, I think about dreaming about creating art that will define our world. Everywhere I look I see new design standards arising and new styles that are dominating the face of the internet. To me, creating tomorrow is adding my work to those designs and doing my part to help shape tomorrow’s design standards. That’s what I tried to capture in my poster. I started by taking a picture. I set up a room at my church

The Filter Bubble Essay

1020 words - 5 pages Eli Pariser, author of the “Filter Bubble” provides insight on how the personalized web is shaping our identity. He argues that what is good for consumers are not necessarily good for citizens (18). The Internet provides us with the answers to our questions, but perhaps this is the problem at hand. Today, we live in a filter bubble that “fundamentally alters the way we encounter ideas and information” (9). On December 4th, 2009 the era of

Do We Live In A Limited World?

990 words - 4 pages It is most certain that at some point we all have experienced the feeling that the Internet is spying on us in some way. Just have Amazon know your e-mail address and all of a sudden you are being bombarded by unending suggestions of the items that are like the ones you have previously looked up on their website. This is the exact issue raised by Eli Pariser in his book called The Filter Bubble. Personalization has grown not only for the sake