Dot-com Bubble

Between 1995 and its peak in March 2000, the Nasdaq Composite index rose 600 percent as investors poured capital into internet-related companies, many with no proven business model, only to see it fall 78 percent from that peak by October 2002. A decline in interest rates widened the pool of available capital, and 1997 US capital-gains tax changes made investors more willing to take speculative positions, while rapidly rising prices and confidence in future profits led many to overlook traditional valuation metrics entirely. Federal Reserve chair Alan Greenspan warned of the speculative climate in a 1996 speech that coined the phrase 'irrational exuberance,' though the warning did little to slow the run-up that followed; critics later argued his own low-interest-rate policy had helped fuel it.