The NASDAQ (or Dot Com) Bubble of the late 1990s
Most of you reading this can remember this bubble, as it was the predecessor bubble to the housing bubble and crash that we are living through right now. During the NASDAQ Bubble (or IT Bubble) companies saw their valuations skyrocket astronomically - many beyond earnings and quite a companies had stock values over $100 per share when the company had yet to even show a profit. Eventually, around sometime in March of 2000 and through the rest of that year, investors finally started to see the bubble for what it was and the stock market subsequently went into the 2nd worst bear market since the Great Depression, until finally bottoming out in October of 2002.
Housing Bubble
Though on the surface it would not appear that the NASDAQ bubble is not related to the Housing Bubble, we all know that is not true. All bubbles have one thing in common - they always come back down to where they started. Take a look at this graph of the NASDAQ Index to see a perfect example. Notice the red line that indicates where the bubble started and how the bottoming of the bubble subsequently returned to pre-bubble levels.
Housing Crash
To see how the housing bubble fares so far in comparison to the NASDAQ bubble of the 1990s, take a look at this housing chart of home values produced by Case-Shiller.
