Conclusion

The dot com bubble was one of the major bubbles the world had faced. Although there is no exact reason of finding on what actually caused the bubble the mass investment was one of the basic reason behind the bubble. The imagination of investors that the technology market would never fail and thus making huge investments could be one reason.

Another reason could be due to the companies issuing public offerings without any stable strategy or plan. The companies were merely trying to portray higher earnings which often did not even exist. Perkins (1999) supports this in their paper 'The Internet Bubble' where they analyse how charisma of technology and immediate success created a revolution in the whole market.

A short documentary about Dot Com Bubble  (.com/bubble)

The Bubble Burst

The bubble continued to grow at a dangerous pace until the 2000's. By 2000 the investors slowly started realising the fact that the current situation was actually just a bubble forming up that could explode any time. Soon, the NASDEQ went down to a steep 2000 from 5000 which was one of the first major setback for the investors. 

Many companies like the Pet.com which had a quite high market capitalization value worth billions just disappeared from the market completely  The entry and exit of such companies were all of a sudden just like a bubble. The value of the stock market plunge down by many trillions which created a situation of panic among the public. By 2002. The value of NASDAQ further went down to a mere 800. Share prices of most of companies fell drastically.

The bubble era also witnessed the exposure of many accounting scandals that were prevailing during the period. Most of them involved companies inflating their earnings to a very high unsubstantial amounts.

Diagram 4 : Chart of Dot Com Technology Bubble