Sir Isaac Newton observed that he could track the movement of the stars but not the madness of men. This fast paced album looks at the history and causes of economic bubbles and focuses on the highs and lows of the dot.com boom of the early 2000s. How do we spot a bubble emerging? Why do we buy into it? And what are the consequences when a bubble bursts? This material forms part of The Open University course DB234 Personal investment in an uncertain world
Track 3: Types of economic bubbles
Intrinsic bubbles, informational bubbles, classic bubbles and fads are all the results of over valued products.
Bubbles are when a products value continues to rise beyond its true value. But what happens when the bubble inevitably bursts?
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What are economic bubbles?
Tom Hadfield was only 12 years old when he set up the internet sensation Soccernet, by the time he was 17 years old he sold the company to ESPN for $40million dollars.
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The dot.com boom
The dot.com bubble wasn't just confined to the investment and trading community, the public also got involved, and this caused a media frenzy.
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Does the media fuel bubbles?
The dot.com's equity was valued on visits and clicks. There was nothing to research, traditional valuing techniques went out the window.
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How was the dot.com market valued?
Once the dot.com market started to crack, investors soon realised that these internet companies weren't really worth anything at all, but was this enough for them sell up before the bubble burst?
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The dot.com crash
When a bubbles bursts the immediate effect is damage to the public. But is there any longer lasting positive effect on the economy?
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Dot.com and the public damage
Is green technology the beginning of a new bubble? Can we spot a bubble emerging? Is there anything that can be done when a bubble does emerge?
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The bubbles of today
The Open University’s Martin Upton, Jonquil Lowe and Alan Shipman take a wider look at whether the rapidly increasing recovery of the world economic market is a bubble itself.
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Bubbles in context
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Originally published: Monday, 29 March 2010
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Body text - Content : Copyright The Open University 2010
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