Learn the history of the 2000 stock market crash, when technology stocks declined 83%. Alsolearn the causes of the crash and the lessons it left us with.

The “Tech bubble” and resulting stock market crash, which began in 2000 and continued until 2002, is also known as the Dotcom bubble, Dotcom crash, Dotcom boom, internet bubble, and 2000 stock crash.

Like all major crashes, prices first rose then fell. Prices were already rising in the mid to late-90’s, but buying accelerated in late 1998. The upward trajectory remained in place through 1999, with a sharp rising occurring late in the year. The buying continued into early 2000, when the Nasdaq 100 index peaked at 4816.35 in March.

By May, the index collapsed to a low of 2897.27, a decline of 39.8%. The index remained above that low until November yet was never able to get close to the former high. In November the technology-heavy index broke below the May low and continued to slide lower. While there were intermittent bounces higher in price, ultimately the index continued dropping until hitting a low 795.25 in October of 2002. A decline of 83%.

That low has not been seen since. The price rallied from that point onward, with the next peak occurring at 2239.23 prior to the 2008 crash.

Nasdaq 100 During Tech Bubble and 2000 Stock Market Crash

It took more than 16 years, not until mid-2016, for the Nasdaq 100 to exceed the March 2000 highs.

Tech Bubble, Crash, and Ensuing Price Action. Log Chart.

The Causes

What drove the stock market higher, and in particular the tech stocks that everyone was so eager to own, is well documented and isn’t complex to understand. Internet-based companies were popping up all over the place, and investors viewed the internet as a new frontier–a game changer–where old rules of investing didn’t apply. No need to analyze a trade, just buy! The prevailing belief was that companies could continue to grow profits via the ever-expanding reach of the internet and the increased efficiency it (potentially) provided.

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