Small Business and Technology Focus

Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW

Tech Bubble Talk Boils Over

01/11/07 - 07:15 AM EST

Kevin Kelleher

Soon after, stocks had risen another 51.3% on the back of -- that's right -- the railroad boom. But by 1881, a mere four years after the end of the previous railroad bust, stocks began another slide and lost 22.2%.

A similar incidence of double bursting bubbles occurred in the first decade of the 20th century. Between 1902 and 1904, the so-called "rich man's panic" caused the stock market to lose 19.4% of its value. After recovering briefly, a global financial crisis in 1906 dragged stocks down another 22.3%.

Proponents of the bubble-is-back theory say some of the inflated assets of the dot-com bubble simply migrated to the real estate market, which thrives on low interest rates that, ironically, were low because of the Nasdaq crash. With real estate prices correcting, that same money has nowhere else to go but back in stocks.

Bubbles are psychological phenomena writ large. They are most likely to happen when people are insisting that there is no bubble, that the rules have changed, that a historical exception is underway -- or that things really are different this time.

No one is preaching those slogans yet, but some of the classic warning signs of poor judgment are starting to creep back: Celebritylike worship of CEOs, garish yet deadly-dull parties, an IPO market heating up after years of frigidity, red-ink startups jockeying for entry into the IPO pipeline, and above all, money desperate for somewhere -- anywhere -- to go.


Small Business and Technology Focus


01/08/07
eBay's Listing Limbo

Shares fall again as analysts fret over a shortfall in quarterly auction postings.


01/08/07
RealNetworks Builds Rhapsody Ranks

The company inks distribution deals for its music service.


01/05/07
eBay's Rally Fizzles

Shares retreat a day after higher-fee glee.


08/05/08
Three Internet Stocks That Could Double

These forgotten Internet stocks are being accumulated by hedge funds.


08/15/08
The Five Dumbest Things on Wall Street

Raspberries for Apple; You'll be sorry, UBS; Fortress or Fort Knox? Wholly unappetizing Foods; give Liberty AOL or give them...


08/15/08
McCain Fund-Raising Picks Up

The GOP presidential candidate raised $27 million in July.


08/15/08
Cash-Back Cards Aren't Money in the Bank

Some credit and debit cards give you some cash back on purchases. But you need to manage it well to benefit from it.


Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Sign up for our FREE newsletters now. See All

  • Cramer's Daily Booyah!
  • Before the Bell

Premium Stock Ideas
Premium Products
AKAM was an Breakout Stocks pick on 2008-02-27