By Indexopedia Research Team | July 11, 2024 | In
Historical examples of hot sectors that didn’t end well All throughout history there are examples of once hot market segments that have captivated investors, only to eventually crash back down to earth in a ball of flames. The most important thing to know is that, in each case, the investors who participated in these bubbles all claimed that “this time it’s different.” It is easy to get caught up in a market frenzy. It might even be easy to rationalize it. But the truth is, bubbles will always exist, created through the nexus of excess liquidity and the irrational exuberance derived from investor emotions. And bubbles burst. They always do. It is simply a matter of when, not if. The examples below illustrate just how dangerous they are, and how much pain their eventual crash caused. The Dot-Com Bubble In the early 2000s, the technology sector, especially companies focused on the internet, faced a monumental collapse known as the Dot-Com Bubble. This period witnessed a staggering decline, where the NASDAQ Composite index plummeted by nearly 78% from its peak. exibit 1 Exhibit 1 clearly demonstrates