The benefits of a stock bubble

We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn

Bubbles in front of the New York Stock Exchange
(Image credit: Getty Images)

We should probably celebrate the moment by spending a few minutes “surfing” what used to be known as the “world wide web”, preferably using a Netscape browser via a dial-up connection that crashes every few minutes. The dotcom bubble is officially 25 years old.

It was one of the great stockmarket bubbles of all time. On 10 March 2000, the Nasdaq peaked at 5,048 after doubling in the space of a year, and rising fivefold over the course of five. It had been driven higher by a wave of enthusiasm for pioneering tech stocks. Over the following 12 months, it crashed spectacularly, losing 75% of its value.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.