Read https://time.com/3741681/2000-dotcom-stock-bust/ (Links to an external site.).
Read the following introduction and answer the questions. Then reply to one of your classmates’ answers with value-added replies (e.g., not just “I agree”):
Hi, everyone, my name is Yulin Yang. In this week, we will discuss about the Internet Bubble and try to use ethical theory to avoid this situation in the future. The Internet Bubble (also known as the dot-com bubble) is a stock market bubble caused by excessive speculation in some Internet corporates in 1990s. Many people are willing to buy a blueprint of a new concept or a new technology with huge amount but ignore a basic idea that if this new stuff is feasible. Once this new concept cannot be monetized, no one can survive from this bubble. But we cannot deny that some sounded crazy concepts benefit our life, such as AI. So, I need your help to address some questions.
- In order to avoid the Internet Bubble, do you think government should publish some laws to limit new concepts out?
- Do you think we should continue to support a new concept at the risk of bankrupt?
- 5G, AI and self-drive system has come up for a while, but there is no sign indicating any of these technologies is ready to go. Do you think we are in the Bubble now? If we are not, do you have any ideas to decrease the probability of the Bubble happen in the future?
Then reply to one of your classmates’ answers with value-added replies (e.g., not just “I agree”):
1. No, I think the internet bubble was just like any other bubble we’ve seen, and they are naturally occurring in markets. That doesn’t mean they’re good, but I don’t know how a government can really restrict this from occurring, because it’s just money flowing… no individual is really doing anything wrong by putting money into stocks, even if its not a smart decision (because they are investing in a bubble). We do have limits that halt stock markets if they reach certain levels during the day, I guess technically we could extend that to longer time frames but I don’t know if that would be a good thing. I’m also confused by “limit new concepts out”… are you asking if the government should create laws to prevent innovation? If so, definitely not.
2. I think that’s for individuals who invest in a particular company to decide. A lot of times they aren’t very well educated on markets and make poor decisions, but that’s not really something anyone else can control. A company needs to properly manage risk in order to survive. If they go bankrupt because they blew too much cash on some new idea, that’s their own fault, and the company goes out of business or gets restructured.
3. It’s hard for me to say. I think looking at stocks in general now, they’re way overvalued. We also have to keep in mind that because if COVID, a lot of tech stocks / internet companies are doing extremely well. So I would say it’s possible that the tech stocks are in the beginning of a bubble. At a very high level (looking at a larger time frame), I don’t think we’re in a tech bubble… I think people understand the value of tech generally speaking and know that future technology is going to increase productivity greatly. I would say that there are individual companies that are probably in bubbles right now (Tesla maybe?).
Again, I think it’s hard to prevent bubbles from happening because they are usually naturally occurring. I would say that investors should educate themselves on markets before they FOMO (fear of missing out) into a market/stock.