What's In Those Bubbles? - Just Hot Air?

During the period 1995 to 2001, a speculative bubble known to us as the “DotCom Bubble” (also referred to as the I.T bubble) occurred. The stock market for the IT sector soared. IPO’s became the “IT” thing and the sky was the limit for all those new Internet-based companies (supposedly). However, as most people know the economy is cyclical. It rises and it falls, repeatedly. It just happens and the Internet economy is no different.

An “Economic Bubble” has developed from the basic concept of a real bubble, it is very fragile, has mostly hot air inside, and can burst at any point. As a kid you always wanted to blow the biggest bubble, which you hoped would never burst – but ALWAYS did!! The dot.com bubble had grave similarities to a child blowing bubbles. Once other children saw him/her they too wanted to join in, which resulted in overcrowding and the bursting of the bubbles.

The very foundations most dot.com companies (the dotcoms) were built on were without any business plan, which was disguised by the sheer volume of venture capital investment. It was all hot air. But, we can’t paint all IT companies with the same brush as other technology based-businesses did prosper during this bubble. You’ve probably heard of eBay or Amazon.

Over the subsequent weeks I will be considering: why bubbles start in the first place, when and why they burst (always), the lessons learned (hopefully) and whether or not we are on the verge of a second dot.com bubble which the media have already baptised Bubble 2.0. (Pot is boiling again but will it be as dramatic?) The aim of my blog is to try and answer some of these questions and maybe pose some of my own!