Stats › Bear markets and drawdowns › Dot com bubble
The dot com bubble
Everybody knows the outline of this one. Internet stocks went silly in the late nineties, then it all came apart. What far fewer people know is what the numbers looked like, how the decline was actually shaped, and how long the whole thing took to play out.
This page is the record. The valuation the market reached at the top, which is still the highest ever measured. The two separate bear markets that followed, with their depths and their durations. What the next decade returned to anyone who bought at that peak. And a straight comparison with where valuations sit today, handled carefully, because that comparison is the reason most people arrive at a page like this in the first place. The reason I wanted it written down is that the dot com era gets used as a rhetorical weapon in both directions. One camp points at it whenever the market gets expensive. The other says the comparison is meaningless. Both of them are usually working from vibes rather than the actual readings, and the actual readings are more interesting than either argument.
Three sources, all listed underneath with the periods they cover. If a number here surprises you, the link is right there, and I'd rather you checked it than believed me. And there's no forecast anywhere on this page, only what was recorded at the time.
The S&P 500's CAPE ratio reached 44.19 in December 1999, the highest reading in a series that begins in 1871, higher than 1929's 32.56 and higher than today's 40.62. What followed was not one bear market but two: March 2000 to September 2001 at -36.77% over 546 days, and January to October 2002 at a further -33.75% over 278 days. The decade that began at that valuation returned -0.9% a year.
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Below this point there are 7 sections, 1 chart and 3 named sources, roughly 1300 words of it. Every figure carries the source it came from and the date the data is from.
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