It wasn't just 'dot-coms' that participated in the equity runup we are calling 'the Bubble'
Any company which massively watered it's stock (yet without expensing that against reported earnings... which made their P/Es appear lower than they were) through stock options grants - Microsoft, Cisco, Oracle, Sun, Disney, Lucent, Nortel, you-name-it - were 'in the Bubble' with their phony earnings. That accounted for the bulk of the Nasdaq.
While over on the NYSE, accounting fictions in the pension plan assumptions of 300 or so of the Fortune 500 companies which use defined benefit pension plans, artificially inflated the earnings they reported to the public as well (GM, GE, Xerox, etc.) Much of those phony earnings are yet to be backed out of those company's stock prices. (GM, for one, owes more in retiree benefits than it's entire current market value... and it's pension assets are growing far slower than the artificial number they are booking as "earnings".)
No, 'the Bubble' was a hell of a lot bigger than just 'dot-coms'.
The final factor was the extra trillion or so in liquidity which was injected into the markets by the Fed to ward off an expected Y2K meltdown. That put the last bit of froth on the Bubble. |
