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Is This Another Tech Bubble Bursting?

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One wild card in this compare-and-contrast is the deflation of the crypto bubble, which is separate but very much related to the overall tech and stock bubble.

Credit: Getty Images

That screaming sound you hear? That's the stock market tumbling, led by a collapse in tech stocks: The overall market is down 18 percent this year, and tech shares are down about 30 percent.

That sound is also a chorus of "I told you so" from people who've been comparing the bull market investors have enjoyed for many years to the dot-com bubble of the late 1990s — and who say things are going to get worse. In the dot-com bust that kicked off in March 2000, tech stocks eventually dropped nearly 80 percent. That's the kind of collapse that could affect everyone, even if they don't work in tech and don't bet on stocks (or, more accurately, they don't think they bet on stocks).

And there are certainly lots of parallels: Like the dot-com era, the stock boom, which began in 2009 and then super-sized during the pandemic, has been fueled in large part by very low to nonexistent interest rates, which made investors more interested in companies that promised to deliver outsized returns. And like the dot-com era, we've seen plenty of companies promise products and results they can't deliver, like hydrogen-powered trucks.

But there are significant differences between 2022 and 2000. The main one: Unlike the dot-com era, many of the most valuable publicly traded tech companies today are actual companies — they make and sell things people value, and usually make a profit doing so. So while companies like Facebook, Google, and Amazon have all seen their shares tumble this year, it doesn't mean their businesses are disappearing — just that investors no longer think their growth prospects are as compelling as they once were.

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