Why did many technology companies have a surge in their stock prices right around Y2K?

Many people believed in the late 90's that the internet and IT would totally change the economy, something like what the industrial revolution did in the past - they called it "new economy". So they bought all technology stocks at ridiculous prices (like 500x annual profit). It was crowd psychology. People liked technology stocks, there was demand, so the financial analysts and companies recommended tech stocks, because that was where the money (and potential client commissions) was. The media covered it, people talked about it, it was like a spiral. There was a guy somewhere in a garage programming something on his computer and the investors were already throwing millions at him before he even showed any viable product or business plan. Technology was "in". You looked like a fool if you didn't own tech stocks and your get-rich-quick friends were laughing at you.

Year 2K (the change 1999-2000) was not a big issue.

But the Fed raised interest rates in 1999-2000 and then there was economic slowdown and Bush came and Sept 11 and people saw the tech companies were no better at withstanding the economic slowdown than the "traditional" companies - except that they were priced 10x or 20x higher, so they fell sharply. Of course some companies survived and changed our lives (MSFT, DELL, AAPL, YHOO), but most just crashed and burned.

You see analogy of this from time to time, but people never learn - and another thing is that you never know if it's a "bubble" or if it's solid, until it happens. For example crude oil went to 150 in 2008. There were some solid fundamental reasons for the rise (oil gets scarce, no doubt about that). But there was also a big portion of psychology involved - people bought oil stocks and oil ETFs and oil everything. And then it went to 35. Same for other commodities in 2007-2008.

You see it with gold now. Everyone is talking about how gold will go to 1,500 or 2,000 dollars. It's the popular thing now. But is it for real or will it drop again? No one knows, until it happens.

You in no way comprehend. now and returned the inventory in simple terms have been given too enthusiastic and is in simple terms correcting to the place it's going to be. Or no count if it fairly is in an index or substantial mutual funds that sector is going out of style. So your sector or marketplace group can drag you down. I have been given caught up in a pair of those the place the employer grow to be increasing earnings 30% YOY and QOQ, however the inventory unexpectedly dropped 30-50%. in one case as a clueless beginner, I have been given bored with using out an prolonged summer season and bailed at $21, each and every week earlier the employer grow to be bought out at $28. yet another grow to be dropping throughout the time of the earnings checklist webcast, and by the question and answer consultation whilst somebody asked why, the officers had no clue. curiously investors in simple terms concept issues have been going to alter and have been given scared out like lemmings. yet I additionally made out on yet another one that i found out grow to be rolling over and acquired at $25+. It later bounced off of $10 and has been lingering around $12-13. you in basic terms might desire to stay assorted and not placed too many eggs in one basket.