The great tech bust of 2000-02 could not take place if not for the boom that preceded it. And quite a boom it was. As
Grant’s Interest Rate Observer reports, U.S. venture capital investment doubled in 1999 and then again in 2000 to a record of roughly $125 billion (1.2% of GDP). By comparison, the 2021 vintage doubled from 2020 to $342 billion (1.4% of GDP); worldwide figures were twice as large: $643 billion.
The initial casualties, in both cases, were money-losing tech companies (ARKK is our present-day proxy). Both busts were sharp and unequivocal. Both times investors early on failed to connect the dots to the suppliers of uneconomic ventures.
~ Kevin Duffy, "Summer of 2000: Déjà vu all over again," The Coffee Can Portfolio, September 18, 2022
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