Dot-com bubble

The term dot-com bubble is a term coined by the media arts term for a speculative bubble burst in March 2000, in particular the so-called dot-com New Economy companies concerned and especially in industrialized countries led to loss of capital for small investors. The term dot refers to the Internet domain suffix ". Com" (English for Commercial).

The dot-com bubble was a global phenomenon. The largest market for technology companies was the U.S. NASDAQ. In Germany, the German stock market briefed the new market as a separate market segment should be listed on the supposedly forward-looking and fast-growing companies, which appeared as a technology company.

The boom phase

Trigger the boom were the high profit expectations and speculation on rising share prices, which were sparked by new technological developments. The establishment of the Internet and the mobile phone and the development of handheld computers led to a spirit of optimism in the field of digital technology. Hence it was from 1995 to a variety of start-up companies ( " Startup" ) and by the large investor interest increases to IPOs. Many investors drew hope that companies operating in those markets, " future business " were, and wanted a share purchase on alleged future profits share, or earn the money on the resale of the shares by the rising prices. In addition, especially accompanied by extensive advertising campaigns IPO of Deutsche Telekom in Germany led to a sharp rise in popularity of the investment object share. As of mid- 1999, the market capitalization of many companies has multiplied within a few months by a significantly increased demand formerly in the stock market not active new investors.

This effect was further enhanced by the strong urge for expansion of many companies; the agreement reached by the IPOs liquidity was invested in the purchase of other listed companies. Other investors were attracted by the often double-digit price increases themselves, which they are required for partially exaggerated thought, but from which they - often referred to as day traders - would still benefit. Also investment funds increased the bubble in which they always put their customers higher profits in prospect. There was a lot of " New Market" - founded, Internet, telecommunications and technology funds that sold like hot cakes.

Investors had especially excessive profit expectations, but ignored the fundamental business valuations as well as financial statements. Thus, even a high cash burn rate was seen as a positive corporate feature. The media incited the euphoria, especially compared to the emissions of the new market, continues to grow. Especially in Germany, where the share of the market transition of Deutsche Telekom was only a few years earlier "people ready", many inexperienced investors were lured into risky investments.

The German stock indices reached their peak on 13 March 2000, the day of the Infineon IPO. Also during this period degenerate into a kind of national sport speculation with new issues reached an unprecedented level: On March 13, as many Infineon shares were traded, that the trading systems of the Frankfurt Stock Exchange and with it the order processing some banks collapsed.

The crash

Towards the end of the boom, it became clear that the highly rated companies could not meet earnings expectations in the foreseeable future. Your market value was usually not covered by material object values ​​, as the capital of an IT company can be found less in material goods, but rather in the spiritual benefits of its employees. Often was the book value of the company from not much more than some buildings and IT infrastructure. The bought- in expansionism company were also usually not profitable.

The doubts were louder than the first of the alleged hopefuls filed for bankruptcy. Moreover, it was found that in some cases, the reported revenues were only fabricated. When in March 2000, prices began to decline and increased sales were made, the market collapsed completely collapsed. When the first signs of a sharp decline became apparent, attracted experienced stockbrokers their capital from the market. The continuing price drop came often new, inexperienced retail investors panicked and sold " at any price" to maintain their losses in check. The fall turned into a price drop.

Many retail investors were assuming that the prices would rebound, missed the correct exit points and lost so their assets.

Follow

The more years before expensive purchased subsidiaries were mostly restructuring cases and therefore not for sale in crisis, so that only the transition into bankruptcy remained. Some companies had lost their entire liquidity after the IPO through ill-considered acquisitions and were now partially self to bankruptcy candidates. In some companies, the price fell less than the carrying value and caused a massive underestimation of the corresponding shares. The result was that some companies were bought with the aim of eliminating, at least the book values ​​( eg office buildings and patents) to be able to still sell for a profit. The IT job market, who had even recruited IT specialists from India due to shortage of skilled workers in 1999, had become familiar with in unemployment within a year.

Investor confidence in the values ​​of the IT industry remained disturbed for years to come. Until the year 2004/2005 in many companies were undervalued. Job losses continued, as in the IT industry again signs of recovery were visible. Has managed to survive the stock market crash in particular large companies - the formerly fine granularity and the resulting diversity of the market, however, is almost gone. The dismissed employees it had often difficult to find a new job, as it had often acted to newcomers from other industries with them due to the shortage of labor in the boom phase.

The central bank of the United States (Fed) responded to the crash with a low interest rate policy to stimulate the U.S. economy (→ Economic Policy). This fostered in the context of a renewed speculation price bubble, this time in the real estate market (→ real estate bubble ), the burst is regarded as the immediate cause for the 2007 open -emerging financial and banking crisis. The U.S. Federal Reserve Chairman Ben Bernanke declared the world's low interest rates with the associated increase in asset prices, such as last in the property market, with a savings glut ( "saving glut" or savings glut ). While emerging markets were trying to save foreign exchange reserves, there had been a lack of domestic investment opportunities in the mature industrial countries because of the already high capital intensity. The world savings flowed in particular in the USA, but also in countries such as Spain, expressed there interest rates and increased real estate prices.