10 March 2000: the dotcom bubble peaks

Tech mania fanned by the dawning of the internet age inflated the dotcom bubble to maximum extent, on this day in 2000.

It only takes a pin to burst a bubble. And on Friday, 10 March 2000, that's exactly what we got. On that day, the tech-heavy Nasdaq Composite index reached its pinnacle at 5,132.52, ending the day at 5,048.62. The dotcom bubble that had been inflating since 1997 finally popped. When traders returned to their desks after the weekend, it was to months of misery.

It's not hard to see what had got them so excited in the first place. The dawning of the internet age during the 1990s seemed like a genuine revolution of the way we live our lives, from doing our shopping online to emailing and research. In many ways, it was a revolution.But in the frenzy to grab a piece of the pie, investors piled in to whatever happened to end in .com. Between 19 October 1999 and 10 March 2000, the index rose by an astonishing 87.8% in less than six months.

Out went the tried and trusted valuation metrics all the ones that we at MoneyWeek are such fans of. All that mattered was that a hot, young tech company had enough cash to expand its customer base beyond the reach of its peers, measured by its "burn rate" ie, the amount of cash a company could burn through before it went bust.

Some companies did survive the bursting of the bubble, such as Amazon and Google. But many didn't, or were sufficiently hobbled by the fallout to be terminal cases. Anybody remember GeoCities?

By December 2000, nine months after hitting its peak, the Nasdaq Composite had more than halved. While the end of the dotcom debacle is considered to be 2003, it wasn't until last summer that the index overtook its 2000 high, having slumped as low as 1,293 in the wake of the 2008 financial crisis.

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