The dot com bust is something that many people talk about often.  It is something that happened after the invention, rise, and subsequent failure of the dot com industry.  Therefore, it is something that affected many people, and still does today.  It had a huge impact on the history of business organizations, as well as the history of international business, and the history of American business as a whole.

What Was The Dot Com Bust?

The dot com bust actually began in 1995, and lasted through 2001.  During this time, the stock markets in Western Nations saw huge increases due to Internet companies, Internet stock, and related fields.  Many people invested in dot com businesses during this time, which only led to more rises in the stock market.  The reason that this happened was that the Internet scene was new.  Therefore, many people wanted to get in on the ground floor with Internet businesses.  Many businesses were so excited by the many dot com organizations that were popping up all over, along with the rising stock market prices, that they failed to follow standard business practices.  In the history of business organizations, it was one of the times in which many people were not careful.

Eventually, the stock market couldn't take it.  There were too many dot com businesses, and there was too much money invested in them.  There were not enough business to go around, and no one was interested in investing in more dot com businesses.  This is what is referred to as the dot com bust.

How Did It Happen?

As the stocks for Internet ventures rose, more and more people invested in them.  However, investors were moving at a very fast rate, and were not using very much caution.  They were choosing businesses to invest in almost at random, and allowing the market to decide which would fail and which would rise to the top.  At the same time, there were many brand new entrepreneurs who were seeing wealth.  They had built their dot com ventures from the ground up.  Most of them had realistic goals and expectations, but were new to the business.  They were unable to plan wisely with the money that they made.  It was often spent very quickly.  Investors believed that the dot com businesses would always thrive, and businesses believed there was no reason to save their money.  They often grew very quickly and did so without putting money aside.

As the market became saturated with many dot com start-ups, all having the same general idea, business began to slow down.  There were too many choices for consumers, and therefore each business got only a share of it.  The businesses that had grown rapidly without saving any money soon found themselves without the funds to handle a slow slump.  New businesses were unable to get off the ground because there were just too many of them.  At the same time, investors pulled out, which led to a stock market plunge.  This led to even less money for the businesses and investors.  Therefore, the dot com bust had begun.

What Were The Factors that Led To It?

There were many factors that led to the dot com bust.  First of all, the soaring stock prices were hard to ignore.  As prices rose, anyone who had thought of getting into the dot com business felt that they would be stupid not to do so.  Also, as soaring stocks continued to shine, investors felt they should get into it as well.

This soaring stock phenomenon caused many to invest.  Yet, all who did had basically the same plan.  Each of the businesses wanted to monopolize their respective sectors and be the only business to enjoy the benefits of the soaring stocks.  This led to competition that was cut throat, and much worse than regular businesses competing with each other.  Therefore, there was no room for the concept that usually happens in business, which is a few businesses at the top, most in the middle, and a few at the bottom.  All the companies wanted to be at the top.  This proved a defining moment in the history of American business.  It also affected the history of international business, as many of the dot com businesses were overseas.

Who Was Affected the Most?

There were two groups that were affected most by the dot com bust.  The first group was the people who had invested in the businesses.  These were the investors.  Some of them were very big, and some of them had put lots of money into the dot com businesses.  Not only did these investors lose their money, but they also found it hard to recover.

The other group that was affected was the group of people who had started the dot com businesses.  Many of them had spent their life savings to get their business off the ground, and had spent all the money the business had made on expanding it further.  Most of them were left without any source of income, or a business to turn to.

What Happened with the Market?

As the dot com bust reached its peak, most investors pulled out their stocks.  This meant that the dot com stocks all plummeted and were suddenly worthless.  This also led to other stock prices falling.  In general, the dot com bust led to a recession that began in 2000.

Does It Affect Us Today?

There are many dot com businesses who managed to pull through the dot com bust and are still active today.  However, many have speculated that recent market trends show another dot com bust is on the horizon.  This is because stock prices for dot com businesses are again rising, and people are again forgetting to be careful while they invest.