Internet Bubble

Finance allah shmoop what is ah bubble All right well

this is a bubble See what happened there got bigger

and bigger and bigger And then it popped and here's

the stock market from about nineteen Ninety two until about

two thousand It got bigger and bigger and bigger And

then it popped And yet was a bubble not just

a big fat bull market It was a crazy ludicrous

tulip mania Kind of time like start ups with almost

no revenues trading and billions of dollars Yep And tulip

mania That was a really thing One tulip sold for

forty grand go figure wasn't like if you ate it

you lived forever So yeah it was a bubble So

what caused the ninety nine bubble Well greed and it

wasn't good At least for some The internet had come

along It was a new thing consumers by the millions

could download in the privacy of their homes Art films

Yeah That's what we'll call them art films by the

terabyte money was flowing from silicon valley investors into startups

at record pace hoping to take advantage of this new

amazing internet thing and the valuations of companies got higher

And higher and higher Nasdaq went up some four hundred

percent in just half a dozen years and the blessed

cos traded at one hundred times trailing revenue not earnings

but revenue So if you think about the idea that

if you invest a dollar and you want to get

more than that back and that dollar comes from profits

of companies than one hundred times revenues cos we're probably

something like five hundred times earnings or more So for

one hundred dollars oven investment you've got like a dollar

of revenues in twenty cents of potential earnings Like maybe

a a decade later maybe yeah that's a bubble and

it burst At least you don't have that danger with

actual tulips or bitcoins Yeah they take bitcoins when you

buy tulips Would be kind of a good marriage there