One great example of irrational consumer behavior was the Beanie Baby craze. People were buying small stuffed animals for as much as $50.00 when the regular price was $5.00. Many thought it was an easy get rich method, or pay for children’s college expenses, while others invested greatly hoping to retire early (Blumenthal, 2009). The bubble left as fast as it arrived leaving consumers with lots of little stuffed animals. Another is commonly known as the dotcom bubble. The dotcom bubble came about due to a combination of the presence of speculative or fad-based investing, the abundance of venture for startups and the failure of dotcoms to turn a profit. Investors poured money into internet startups during the 1990s in the hope that …show more content…
By this point, many startups began to pay their employees with company shares with the intention that the shares would become very valuable when the company went public. The majority of the software companies that were started during this era were located in Silicon Valley, near San Francisco, which became a technology Mecca (Colombo, 2012). By the mid-1990s, the NASDAQ index of technology stocks was rising at an extremely fast pace, causing many tech-focused investors to become …show more content…
The largest bubbles appear to develop during periods of rapid and radical innovation, which may leave the environment more vulnerable to accepting the bizarre rationalizations that often accompany financial speculation. During the 1920s, the automobile came into its own, and many homes were wired for electricity. Radio wasn't around at all during 1920 but by 1929, it was in one of three households, bringing entertainment, music and headlines to millions. During that timeframe, there were two tremendous financial bubbles; the 1925 Florida land grab and the roaring stock market that preceded the crash (Blumenthal,