There are also stock market bubbles.In a normal market, investors buy stock in a company because they anticipate that future profits will become dividends and they believe the value of the company's assets will increase.Sometimes, though, a "herd mentality" sets in and too many brokers rush to buy, driving prices like mercury up a thermometer to levels that prove unrealistic.Eventually it becomes clear that further increases are not forthcoming and price deterioration develops, followed by a swift drop.When this happens to too many companies in aggregate, it is called a stock market crash.A recent stock market bubble was the "dot-com" bubble.The buzz about the economic possibilities of the Internet encouraged investors to fund the creation of many dotcom companies - too many it turned out.For several years, dozens of entrepreneurs sought to duplicate for themselves the results of those that had come before.Many investors envisaged wealth for any business with a website that could advertise on TV or billboards, even if their actual services were ambiguous.Instead, on March 10, 2000, the dot-com boom reached its peak when the stock index hit 5,132.52.Over the next two and a half years, the index dropped to as low as 1,108.Very few companies bucked the trend. Most had blundered into awful financial difficulties, selling off their assets to healthier companies.
