From Hype to Bust: Investigating the Underlying Factors of the Dot-Com Bubble and Developing Regression Models for Future Market Predictions

Abstract

The dot-com bubble, spanning from the late 1990s to the early 2000s, marked a time of unprecedented growth and speculation within the technology sector. This era culminated in a market crash with far-reaching repercussions for both Wall Street and investors alike. Our paper delves into the fundamental causes and effects of this phenomenon, posing the following research question: What were the primary factors driving the dot-com bubble, and how did these elements influence the economy in the aftermath of the subsequent crash? To address this inquiry, we employ comprehensive regression analyses and academic investigations to pinpoint the root causes of the dot-com bubble, while also assessing its impact on the economy. We further construct a logistic regression model to forecast potential market bubbles in the future. By analyzing data from multiple sources, we paint a detailed picture of the circumstances that precipitated the dot-com crash, offering valuable insights into how similar market bubbles can be anticipated and averted in the future. Our research serves as a critical contribution to the existing body of knowledge surrounding the dot-com bubble, shedding light on the various factors that played a role in its development and eventual collapse. Through our findings, we hope to facilitate a deeper understanding of the dynamics at play during this turbulent period in economic history, ultimately aiding in the development of strategies to safeguard against future market instabilities.