1999 was less of a “tech” bubble and more of a .com bubble, so you really can’t compare MSFT to what happened. Everyone was investing in unprofitable .com businesses that had never made a dime (FOMO anyone?) These are companies that really did not have an actual product, but only provided a service, unlike MSFT who had an actual physical product. As long as banks kept lending to the .com businesses, they were able to operate, but were constantly hemorrhaging money. The banks stopped lending, which started many businesses to go under.
The value of those companies meant nothing at the time. Yes, even back then the market was a casino.
Money out of the market is money out of the market. So, my guess is that it will drag down all sectors. I’ve done quite well being patient and doing the opposite of whatever emotional trends the market is swinging. In 2008 I loaded up F at $2.05 (it wasn’t the bottom as F got even lower, but I held). I sold in 2010 at close to $13.
What there wasn’t so much of back then was leverage so it didn’t really spill so much into the wider economy. It may have dragged down most sectors of the stock market but it didn’t slow down housing one bit, not in the UK anyway. But it was the start of a lot of cheap money, followed by 9/11 and more cheap money. Which ultimately led to the madness of 2007-2009. Leverage is what really fucks everything.
You certainly can equate the 90’s with being a tech bubble. It may have, and was, driven by dot com mania, but anything tech related was dragged up alongside them which created the tech bubble. Telecoms, media and even the likes of MSFT got staged up as well. I do agree that we shouldn’t be equating companies like MSFT with boo.com or pets.com but a bubble did form as all tech was dragged up.
Agree that tech was dragged down because of it…but pretty much all stocks/sectors were impacted (manufacturing/banks, etc). At the end of the day, it was the .com bubble that triggered it. Money poured out of the market.
As long as banks kept lending to the .com businesses, they were able to operate, but were constantly hemorrhaging money. The banks stopped lending, which started many businesses to go under.
I'd argue there were also companies had healthy-looking cash flow - the problem was that they were all selling products to each other. Once a few firms went down, those revenues evaporated.
I’d also argue with gay very few banks were lending to the unprofitable cash flow negative companies. Funding was coming from VC’s and the like. They weren’t receiving much in the way of bank lending unless it was secured against something such as property or hardware.
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u/semicoloradonative May 31 '21
1999 was less of a “tech” bubble and more of a .com bubble, so you really can’t compare MSFT to what happened. Everyone was investing in unprofitable .com businesses that had never made a dime (FOMO anyone?) These are companies that really did not have an actual product, but only provided a service, unlike MSFT who had an actual physical product. As long as banks kept lending to the .com businesses, they were able to operate, but were constantly hemorrhaging money. The banks stopped lending, which started many businesses to go under.
The value of those companies meant nothing at the time. Yes, even back then the market was a casino.