Lecture10 - IPOs and the Internet Bubble AEM 423 Copyright...

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1 AEM 423 Copyright © by Vicki Bogan IPOs and the Internet Bubble z A Stock Market Bubble is a type of economic bubble in which the value of a stock rises dramatically z In general, bubbles are viewed as outbursts of irrationality: self- generating surges of optimism that push up asset prices and misallocate investments Overview
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2 Market Bubbles z Market bubbles are nothing new { Taiwanese stocks in 1987 { Japanese stocks in the late-1980s { Biotech boom in the 1980s { “Nifty Fifty” stocks in the early 1970s z Most famous market bubble took place in Europe during the first part of the 17 th century – Tulip Mania Tulip Mania z Tulip cultivation in the Netherlands started around 1593 z Flower rapidly became a coveted luxury item and status symbol { Special breeds were given exotic names { Tulips were exchanged for land, livestock, houses, etc.
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3 Tulip Mania 16 16 th th /17 /17 th th Century Netherlands Century Netherlands Tulip cultivation in Netherlands is thought to have started
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Lecture10 - IPOs and the Internet Bubble AEM 423 Copyright...

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