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there were all these baby boomers who forgot to invest for their retirement and this flood of money started pouring into equities. greenspan kept lowering interest rates. then Etrade came along and any idiot with $2000 could open up a margin acount and be a get rich quick daytrader. combine that with a new IPO everyday where anyone with a computer in their closet and a home made website could be called "the newest dot com startup" and gambling fever took over. people bought anything with .com in it with borrowed money. then when there was no more borrowed money to put into the market on 1/1/2000 the bottom fell out and im sure one margin call led to another then everyone wanted to sue their stockbroker for letting them gamble their money away.
edit: you will never prevent this from happening again, read this by W.D. Gann written in 1942:
History proves that wars break out every 20 to 25 years. It also proves that there is a great wave of SPECULATION and a BOOM of some kind in nearly every country every 20 to 25 years. Why do these WAR PERIODS and BOOM TIMES come at such regular cycles of intervals?
The main cause of these is that HUMAN NATURE NEVER CHANGES. Every 20 years a new generation comes along. They are full of hope, optimistic and are progressive and up-to-date. They are inexperienced. They know nothing of war or of the bitterness of war, because they have never been in a fight. They are anxious to get into a fight. It is easy for the politicians to induce the young men to go to war, but it is hard to get the old fellows who have had the bitter experience and the suffering, to go to war. They want no more of it. The young buck is wild and always ready to run and to fight.
It is the same with the Commodity market. The young generations either have inherited money or they make money, and they want to take a chance. It is the nature of youth to gamble, to take changes and to be fearless of danger. Therefore, the young generation are anxious and eager to try their hands at SPECULATION. When they get into a RUN AWAY BULL MARKET, they have no more sense than to keep on BUYING. They throw caution to the wind. This increased BUYING power causes Commodities to go to HEIGHTS UNWARRANTED BY SUPPLY AND DEMAND. The result is that when this BOOM is over, the young generation suffer severe LOSSES, get some valuable experience and are not so anxious to try it again."
Well I'm not in the business of doing your classwork for you, but yeah late 90s.
In Simple explanation plz, what caused it, its effects? How it happened, etc.
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