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"The internet bubble - why stock market booms happen". Talk given at Warwick University, February 2004.


One of the advantages of trying make sense of the internet boom of the late 1990s – and the subsequent bust – so soon after the event is that it‘s fresh in everyone’s memory. Many became caught up in the boom while it lasted. People who now say to themselves: “How could I have believed the absurd growth projections that were being made for all sorts of industries and activities at the time?”.

The reason is that enough people became convinced that the rules of the economic game had been changed. That the business cycle had been abolished. That the internet heralded, for the US economy and, by extension, the world economy, the emergence of a self-perpetuating growth machine. None of this is new. The parallels in economic history are both numerous and fascinating---and instructive! I cover these in this talk. And I end with a prediction.

What this lecture does is try and answer 4 questions:

1. What happened during the internet bubble?

2. Why did the internet boom occur?

3. What can we learn from the history of financial bubbles?

4. How likely is it that something similar will happen again?

If you are interested in reading it please contact me via this website (there's a link in "About the author" straight through to my email).

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