Why did the market drop heavily starting in the year 2000?

Question

I'm talking about beginning of 2000 to around 9/11...the stock market was tanking heavily. You can see this if you look up a historical chart of the Dow Jones Industrials, NASDAQ, S&P 500.

I'm trying to learn about why the market was dropping before this new era of terrorism and conflict started.

Please, only informed answers (no conjecture) and any links to relevant articles would be really outstanding.

Answer 1

Republicans !!

Answer 2

In part...There was a lot of spending (and worry) prior to Y2K about possible effects.  Then nothing happened, so money pulled out.  Also tech stocks seemed to peak out.  They were rising so fast it was almost like a ponzi scheme.  Many of the stocks were trading on hype and ideas.  Many of the silican valley companies had yet to make a dollar...when they didnt things went south.  Likely many other factors.

Answer 3

speculators drove up the prices of tech stocks to unrealistic levels compared to how much money those companies were actually making (or losing) - they just weren't worth what they were priced at and when the people at the top tried to sell, no one wanted the stocks anymore - so the prices crashed - in some cases dropping 95% or more - lots of the companies didn;t even have any or very little revenue - never mind profits - also some accounting scandals and major lying by execs from very large companies caused those stocks to crash (Enron, Worldcomm)

Answer 4

The tech bubble burst. Simple as that. The Nasdaq has never reached those same levels since then.

Check it.

http://en.wikipedia.org/wiki/Dot-com_bub...

Answer 5

The dot.com crash.  People were irrationally exhuberant in their purchases - believing the market would go up forever.  It never does, of course.  As typically happens in these episodes, many people are buying in at the top when they should be steering clear. At the same time, the knowledgeable investors are taking advantages of those pre-peak sales opportunities to take profits and exit. Pretty soon there are no buyers left and the price falls fast and hard.  9/11 only compounded the issue, but stocks came back from that.  By 2002, 2003 the general market was building a base again.  It's important to note that some of the outstanding fund managers did very well during these same several years of market downturns.  Those are the people you want managing your money.  Ken Heebner is one of them.  He has the best record for the last 1, 3, 5 and 10 years.  No small feat.  

If you want a simple yet informative explanation, get William O'Neill's paperback book, The Successful Investor (McGraw Hill). It includes a brief section on the period you're interested in. It is also the most useful information in the least amount of words I've yet seen on general investment strategy, and if repeatedly re-read, will give you a strong leg up on truly understanding preper investment technique and why.

Answer 6

remember the tech bubble?