The stock market situation in the 1990's period cultivated an idea of a New Economy in the minds of the economists. They imagined an economy where there was no failure of companies or any evidence of inflation at all.
The main reason for this was most of the companies were going public and the public were always ready to purchase shares of any internet based company. Whereas many of the companies dint even have a clear strategy to focus upon. They just tried and copied when other companies in the filed made an IPO and was successful. A significant example was that of the online pet products store Pets.com which was about to fail and exit the industry. At this point the company offered their shares for public subscriptions which turned out to be much sought after by the public thus enabled the company get back into the market.
Diagram 3 : Visual representation of market crash
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