Learn the stock market › Stock market crashes in history › Lesson 3 of 7
The dot-com bubble
The rise
In the five years to the high on Mar 10, 2000 the Nasdaq rose 529%. As early as December 1996 the Federal Reserve's chairman, Alan Greenspan, asked in a speech how we know when "irrational exuberance" has pushed asset prices too high. Prices then rose for more than three more years, so a warning says little about when things turn.
The crash
Indexes fell by different amounts, because they hold different companies.
S&P 500, 1999–2007
S&P 500The high before the crash
| What | Date | S&P 500 |
|---|---|---|
| The high | Mar 24, 2000 | 1527.46 points |
| First close 20% below | Mar 12, 2001 | −20% |
| The low | Oct 9, 2002 | −49.1% |
| Back at the high | May 30, 2007 | seven years |
The Nasdaq fell 77.9% from Mar 10, 2000 to Oct 9, 2002 and needed 15 years to reach its high again, without dividends. The S&P 500 holds more of other industries and fell less. The way down took nearly as long, but the way back only seven years.
It was a slow crash. No single day came near 1987, and the largest one-day fall was −5.8%. The S&P 500 first closed 20% below its high on Mar 12, 2001, nearly a year in.
What happened to the companies
Online shops such as Pets.com, Webvan and Boo.com failed in the crash. Here is how large US companies with closes from that time did, dividends included, from the S&P 500's high to its low.
| Company | From the index's high to its low |
|---|---|
| AMD | −86.8% |
| Oracle | −81.4% |
| Apple | −80.4% |
| Amazon | −76.8% |
| Berkshire Hathaway | +25.8% |
| Eli Lilly | +0.0% |
| Walmart | −7.4% |
The median company fell 64.5%, with a wide spread: AMD −86.8% and Berkshire Hathaway +25.8%. The list holds the 12 of today's largest US names with closes from early 2000. Companies that disappeared are missing, so the real picture was harsher.
Was it a bubble?
Researchers use the rise as the sign. Greenwood, Shleifer and You count .com stocks of the late 1990s among industries that rose over 100% in two years, but they also show that many such rises kept going. How hard this is to see in advance is the last lesson in this course.
See it on one stock: AMD.
Test yourself
Which index fell most when the dot-com bubble burst?
Closes through Nov 6, 2026.
Sources
- Alan Greenspan, The challenge of central banking in a democratic society, speech of December 5, 1996, read November 5, 2026.
- Greenwood, Shleifer and You, Bubbles for Fama, NBER working paper 23191, read November 5, 2026.
- Wikipedia, Dot-com bubble, for the companies that failed, read November 5, 2026.