✳flâneur — a map of the web's best reading

Bubbles - Econlib

econlib.org · 2,478 words · saved by 1 readers

In 1996, the fledgling Internet portal Yahoo.com made its stock-market debut. This was during a time of great excitement—as well as uncertainty—about the prosperous “new economy” that the rapidly expanding Internet promised. By the beginning of the year 2000, Yahoo shares were trading at $240 each.1 Exactly one year later, however, Yahoo’s stock sold for only $30 per share. A similar story could be told for many of Yahoo’s “dot-com” contemporaries—a substantial period of market-value growth during the late 1990s followed by a rapid decline as the twenty-first century approached. With the benefit of hindsight, many concluded that dot-com stocks were overvalued in the late 1990s, which created an “Internet bubble” that was doomed to burst. Thus, as this account implies, the definition of a bubble involves some characterization of the extent to which an asset is overvalued. Let us define the “fundamental value” of an asset as the present value of the stream of cash flows that its holder e

Bubbles By Seiji S. C. Steimetz Categories: Corporations and Financial Markets The Economics of Specific Markets By Seiji S. C. Steimetz, SHARE POST: --> What Are Bubbles? In 1996, the fledgling Internet portal Yahoo.com made its stock-market debut. This was during a time of great excitement—as well as uncertainty—about the prosperous “new economy” that the rapidly expanding Internet promised. By the beginning of the year 2000, Yahoo shares were trading at $240 each. 1 Exactly one year later, however, Yahoo’s stock sold for only $30 per share. A similar story could be told for many of Yahoo’s

Explore this link on the map →

related reading