The Rise and Fall of the Dot.Com Bubble Essay

The fourth considers the shift made, From ARPANET to Internet approaching defense and research. The fifth section covers The Internet in the Arena of International Standards. The final section, Popularizing the Internet, shows the beginning of the wide spread of the Internet but before Internet connectivity becomes popular at the personal level. All things considered, the book states the expansions in Internet history between 1959 and 1991, with some proceedings to 1994.

It is important to know the history of the internet. The internet is a worldwide network of computer systems that are connected to each other by cables (Howe, 2012). The internet first started out as a military experiment. In 1957, the Advanced Research Projects Agency (ARPA) was created by the United States department of Defense (Computer History Museum, 2004). The project was started after the Russians launched a satellite into space for communication reasons. The satellite was called SPUTNIK (Computer History Museum, 2004). It was rumored that President Eisenhower got worried and decided to get the United States to launch its own satellite. They recruited Dr. Joseph C. Licklider of MIT, was made head of the Information Processing Techniques Office (IPTO)(Computer History Museum, 2004). Their purpose of the project was to focus on improving the military use of computer information.

The United States signaled a new era after the end of World War I. It was an era of hopefulness when many people invested their money that was under the mattresses at home or in the bank into the stock market. People migrated to the prosperous cities with the hopes of finding much better life. In the 1920s, the stock market reputation did not appear to be a risky investment, until 1929.First noticeable in 1925, the stock market prices began to rise as more people invested their money. During 1925 and 1926, the stock prices vacillated but in 1927, it had an upward trend. The stock market boom had started by 1928. The stock market was no longer a long-term investment because the boom changed the investor’s way of thinking (“The Stock Market

In the early 1990's, the stock market started to pick up and increase at unseen rates. Everyone and their brother saw this and wanted a piece of the easy money. People were investing and in the mid 90's, the New York Stock Exchange was growing at an unseen pace. Publicly traded companies were increasing their capital by almost one fourth of their whole income per year. Public companies and of course their CEO's were receiving more free money than they knew what to do with. This boom was to set up one of the worst bust's of the stock market in our generation, though

economy, people began buying stocks on the margin. They would borrow most of the stock’s price from a stockbroker and only pay a little bit of the price. If the stock prices kept rising, this system would work well, but if the prices fell, people could not pay the loan back. Near the end of the 1929 year, prices were too high, so people wanted to sell their stocks. They thought the prices would lower soon. Stock prices did go lower and people were not buying. They all wanted to sell their stocks. Prices went even lower on October 29, where 16 million stocks were sold. This caused the collapse of the market.

The internet and the development of digital technology (computer-based technology) in particular, have made the most significant impact in the field of information and communication technology in the past decade. The internet is essentially a network of computers across the world which is linked through global

On Tuesday, October 24, 1929, the United States stock market experienced the single most catastrophic crash in its history. This date would come to be known as “Black Tuesday”. Before Black Tuesday, America was experiencing one of the single greatest economic eras of prosperity. So much so, that it was known as the “Roaring 20’s”. During this time the amount of American wealth tripled, with mo re money going to the top 10% of people and the bottom 90% being left behind. There were more and more people buying company stock, but there was not enough people selling stock, which led to massive amounts of price inflation. This inflation led to the stagnation of various industries, such as, agricultural and manufacturing. When stockholders realized that the companies that they were investing in were not worth the stock they purchased them for there was a major sell out, which led to the bankruptcy of banking, agricultural, and manufacturing

History of the Internet To imagine a life without the internet is to imagine a life without so many advances in education, medicine and communication. The internet has provided our society an effortless way to live our daily lives by obtaining worldwide information at the click of a button. The superhighway is a variety of network infrastructures that provide multimedia use to the public and that use has allowed advances for the future.

Over the course of the next twenty years it was mainly utilized by the United States military and government to communicate with each other during the “cold war” with the Soviet Union, and the allies of the United States. By 1982 the concept and use of the Internet had been reshaped by the Internet Protocol Suite (IPS). (CNN.org) The idea eventually evolved and was adapted by the United States in 1986, when the Internet Protocol Suite expanded and began to provide access to supercomputer sites for research and educational organizations. The internet further evolved by the mid-1990’s into the mass commercial use we see today, with many early use restrictions lifted. Since then the Internet has continued to expand and continues to advance. (Wikipedia.org)

Stock prices continued to rise and by fall that year had reached levels that could not be justified by future earnings. The stock market finally burst, as investor began to dump shares en masse. Millions of shares ended up being worthless and those investors who had bought stocks were wiped out completely. “The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production.” (The).

Investing in the Stock Market was extremely popular in the “Roaring 20’s,” but no one actually knew the devastating impact the stock market would have on the economy. The Stock Market was purely a “speculative bubble”, where people would take risks in buying and stock markets hoped that prices

The 1929 stock market crash is a well known economic phenomena studied in American economic history. In August 1929, the U.S. stock market rapidly expanded to its peak due to a bullish market and reckless speculation. The accompanied decline in the manufacturing sector caused unemployment to rise and allowed stocks to be valued at disproportionately optimistic levels. Some causes of the 1929 stock market crash are rumored to be low wages, extreme debt, and an excess of bank loans that could not be liquidated (History). The market crash and the imprudence of the financial system, among others, catalyzed the downward spiral of America into the Great Depression (1929 – 1939). In essence, “Commercial banks took on too much risk with depositors’ money” (Investopedia). Banks were excessively optimistic and were investing their assets in risky undertakings, in return for excessive returns. Many faulty companies had access to loans due to the negligence of the banks; the banks would, in turn, encourage their investing clients to invest in the companies that the banks had loaned capital to. Once the companies started defaulting on their loans, investors started experiencing negative returns and lost a lot of the capital invested – many livelihoods were destroyed due to the greed and carelessness of the financial system.

The Stock Market crash of 1929 was devastating tragedy. “In a matter of hours, thousands saw their fortunes sink, turning previous paper millionaires into destitute paupers.” Back in the roaring twenties, the American society was seen as very prosperous. Many citizens were becoming millionaires each day due to their ‘promising’ Stock Market. What they didn’t see coming was the great fall of their economy because of a fault in their banking systems and stock market. Several diverse economic factors led to the Stock Market crash of 1929. Even though they had many warnings of the overall destruction of their stock market, such as excessive loans, buying on the Margin, expectations, Agricultural Recession and the weakening American Banking System,

It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.

This section will focus on the analysis about how bubbles affect investors’ behaviors. Since bubbles are closely connected with crises, doing research on investors’ behaviors about overvalued assets can help economists to understand crises’ fundamental. Therefore it is good for governments to take actions to prevent these crises. The first part of this section will describe the definition of “bubbles” in detail, and the second part will illustrate relevant empirical evidences to further explain how bubbles affect investing behaviors.