Reviewing The Stock Market Process And Looking At Companies Rising In The Bull Market Of Technology Stocks

Great companies born in the bull market of technology stocks

Technology stocks

At the end of the bull market, stock prices collapsed and companies went bankrupt.

After the wind stopped, the pigs on the draught fell heavily on the ground. But at the same time, a great number of great technology giants were born. Hawks who did not need the draught continued to fly high.

More importantly, compared with the real estate bubble, the technology bubble is obviously more conducive to economic innovation.

Great companies born in the bull market of technology stocks

Trigger: the most pformative mode of pportation in the mid nineteenth Century; huge financing needs.

The railway is the most pformative new thing in the mid nineteenth Century.

The impact of Railways on a country's economy, industry and individual businesses is enormous, comparable to the impact of Internet technology on human in 90s.

In 1829, Andrew Jackson took office from Tennessee to Washington and spent a month in the carriage.

By 1860, it will take only 3 days by train.

Railway financing demand has led to the frenzied capital market.

The construction of the railway required huge capital. At that time, the income of a middle class in the United States was only 1000 dollars, and the cost of the railway was as high as 36000 dollars per mile. If there was no support from the capital market, it would be unthinkable to build the railway.

The huge financing demand of railway makes railway securities a major investment in London, and the crazy speculation in railway stocks has brought London and Wall Street into an unusual historical period.

The total length of the railway line is developing rapidly.

In September 27, 1825, the first modern railway in the world was opened between Stockton and Darlington in the UK, at an initial speed of 4.5 km, reaching 24 km later.

In about 25 years, the total length of railway lines in the world has reached nearly 40 thousand kilometers.

After several years of industrial crisis in Britain, in the past 1930-1945 years, hundreds of millions of pounds of money were invested in railway construction.

When the whistle rings, gold is worth two.

In September 1830, the world's first inter city passenger line "Liverpool Manchester" railway was built.

Because of the huge investment in railway projects, the construction fund of the railway is raised by issuing shares.

What most investors fail to think is that the benefits of this railway are surprisingly good. Not only the freight trains run all the way, but also the economic development has promoted the personnel exchanges between the two industries that are originally important industrial cities, and the passenger traffic benefits have been considerable.

In 1845, a wave of popular speculation reached its peak in Britain.

On the day of July 16, 1845, 65 railway companies with a total capital of more than 1 million 300 thousand were granted permission to build the 600 mile long railway line in Britain.

Because there was a need to redesign and print large quantities.

And bonds, resulting in the unusual shortage of lithographic printing workers.

To meet this huge demand, a printing factory recruited 400 high level printing workers in Belgium, who slept at work at night.

In 1847, interest rates in the UK even doubled to more than 7%, as speculative activities and the creation of new companies required large amounts of money.

Railway securities have become the main varieties of Wall Street.

In 1935, only 3 railway stocks traded on the stock exchange, and by 1840, there were 10 railway stocks, while in 1950, it expanded rapidly to 38.

In 1954, when the civil war broke out, railway stocks and bonds were equivalent to 1/3 of American securities.

In 1947, the government announced the cancellation of all the programmes that had not yet been passed.

On the London Stock Exchange, the share price of Railways dropped sharply, and many new companies had to declare bankruptcy before they passed the first year.

Just because of the influence of Britain, 128 railway companies declared bankruptcy in the wake of the collapse of speculation.

Bank interest rates doubled.

In 1847, interest rates in the UK even doubled to more than 7%, as speculative activities and the creation of new companies required large amounts of money.

Trigger: the huge business opportunities of the Internet; the fanaticism of the media.

Internet New Technologies Inc have mushroomed.

In 1994, Mosaic browsers and the World Wide Web appeared, allowing the Internet to enter the public view.

In 1996, most of the listed companies regarded the website as a necessity of the company.

The openness, timeliness and free nature of the Internet have enabled many young people of technological origin to see opportunities.

As a result, a large number of New Technologies Inc around the Internet have mushroomed.

At the same time, investors and speculators on the market also saw business opportunities and poured into the industry in large numbers, forming a positive feedback.

Media and research reports strongly advocate new Internet technologies.

In the late 90s of last century, public opinion media and various research reports all highly praised the "new economy" guided by science and technology services, and spurned the old economy, mainly traditional manufacturing industries.

In the face of the new economic boom of the Internet, many traditional investment ideas have been subverted and ridiculed. Many investors think that this is not the same. They are more concerned about the delineation of the "bright future" of listed companies, and are not concerned about whether the investment companies can make profits.

In pursuit of short-term investment returns, investors have abandoned the "old economy" and pursued stocks that benefited from the "new economy".

In 1994 -2000, March, the technology bubble expanded rapidly.

In the context of the overall economic prosperity of the United States, the Nasdaq composite index, which reflects the overall rise and fall of high-tech industries and technology shares, rose rapidly, rising from 747 points in October 1994 to 5048 points in March 2000, rising by nearly 6 times.

Amazon in 1999 almost doubled every month.

Though this became a truly great company after that, the market did not have any timidity about the company that was not profitable at that time.

In fact, at that time, the valuation of Amazon was valued by the market. The company looked at the two tier market from the perspective of primary market.

Another case is

It belongs to Taiwan, China.

On the day of President Jiang Zemin's visit to the US in 1999, the company's stock rose from $40 to $140.

Of course, a few years later, the company declared bankruptcy.

The conditions for the commercialization of the Internet in the United States are becoming more mature, playing a very helpful role in the rise of the stock market.

First of all, the popularity of personal computers in the US increased significantly during the period. The penetration rate in 1993 was 22.8%, but by the end of 90s, the proportion had doubled, and by 2000, it had exceeded 50%.

In addition, the related technologies of LAN and WAN have matured, making the software compatible with hardware. The number of hosts in the US has increased geometrically since 1996.

Over expectations and speculation about future expectations.

In the late 90s, a large amount of venture capital was invested in the information technology and Internet industries.

Investors who are in the late stage of the new "new economy" are almost unwisely pursuing the IPO project linked to technology and the Internet.

Many companies even need to change the name of the company to the Internet, so that the stock price will suddenly increase rapidly, even if there is no relevant business at all.

In 1999 alone, there were nearly 500 IPO projects, of which 117 achieved double market value on the first day of listing.

For example, VALinux shares rose 736% on the day of IPO in December 1999, setting the highest record of IPO in the United States.

97 years

With the impact of the crisis and the return of international funds to the US, the Nasdaq stock market has reached its peak.

In the 97 year, the Asian financial crisis broke out, and the investment risks of emerging market countries suddenly increased, and a large number of international funds returned to the United States.

During this period, the US dollar continued to appreciate, while the US Federal Reserve chose to cut interest rates continuously to alleviate the pressure on the domestic economy caused by external shocks.

A large influx of funds into the stock market, coupled with the rapid growth and expansion of pension funds in the US in 90s, has provided a powerful impetus to the pinnacle of the capital market.

The Federal Reserve increased its interest rate by 0.25% in February 2, 2000 and March 21st for the two time in a row.

At the beginning of 2000, the US economy showed signs of overheating. In February and March, CPI exceeded expectations for 3.2% and 3.8% respectively, the highest level in three years.

In response, the Fed raised interest rates two times in February 2, 2000 and March 21st.

Corporate performance has generally declined and stock supply has increased substantially.

From April 1999 to April 2000, the total amount of IPO and additional issuance in the Nasdaq market amounted to US $53 billion 600 million.

In February 2000, the total amount of IPO and additional issuance increased to a record high of $9 billion 700 million. Secondly, from December 1999 to March 2000, the Nasdaq market lifted its market value by more than 200 billion.

In January 2000 alone, the market value of the lifting of the ban reached a peak of 70 billion.

Microsoft was convicted of violating the US anti-monopoly law and became the fuse for the subsequent bubble to burst.

In April 3, 2000, the US District Court announced that Microsoft had violated the US anti-monopoly law. Investors were generally worried that Microsoft might be split.

At that time, Microsoft occupied 10% of the total market value of the Nasdaq composite market on the scale of 520 billion US dollars, and as a leading banner of high-tech enterprises, its every move has greatly affected the sensitive mentality of investors.

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Trigger: the government launched a series of rescue policies and demonstration of US technology bubble.

The government decided to rescue the market.

In May 19, 1999, after two years of bear market, the Chinese government resolutely launched a series of "rescue the market" policy: clearing up and correcting the OTC market, opening up the legal financing channels for securities companies, expanding the pilot of securities investment funds, lowering interest rates and lowering the accuracy.

Subsequently, China's stock market, led by technology stocks, broke out a bull market that lasted for more than two years.

Seven factors make the "reform cattle" continue.

On the basis of the driving force of the first wave, the second wave of "reform cattle" has also joined some new driving factors, making the "reform cattle" continue:

First, interest rates fall.

Raise the relative return and valuation level of the stock market.

The lending rate fell from 8.64% in March 1998 to 5.85% in June 10, 1999.

The deposit reserve ratio dropped from 13% in 1997 to 6% in November 1999.

The monetary policy of double quantity and price makes the risk-free interest rate lower, the relative return of the stock market rises, and the valuation level rises.

Second, policy easing.

The implementation of proactive fiscal policy and loose monetary policy to alleviate the risk of economic stall, the issuance of long-term treasury bonds and the strengthening of infrastructure construction are the main contents. The central government is responsible for implementing the proactive fiscal policy on a continuous and moderate basis. The average annual issuance of treasury bonds is 100 billion yuan. In the seven years, a total of about 900 billion yuan has been issued. There has been no short-term large-scale stimulus, which has not only kept the bottom line, but also avoided excessive interference in market expectations and micro subject behavior.

Third, policy guidance.

519, the market can be seen to a certain extent by the government's support.

After the Asian financial crisis for 98 years, the Chinese government, in order to establish its image, did not depress the negative impact of the financial crisis on the Chinese economy through the depreciation of the RMB. Instead, it restarted the growth by digging the potential of China's economy. For this reason, the state-owned enterprises in the 98-2000 years of three years were out of difficulty to replace the state-owned enterprises.

Fourth, speed up reform.

Major reforms push forward in real terms, releasing long-term growth potential and institutional dividends.

Significant progress has been made in the major reforms, and the pace of progress has been accelerated. These reforms are crucial to restart the growth of China's economy and in fact release huge institutional dividends.

Fifth, risk bomb disposal.

Financial risks can be controlled and risk preferences improved.

A series of major financial market reform measures have effectively eliminated financial risks.

First, state-owned commercial banks carry out financial restructuring.

In 1998, it issued a special treasury bond of 270 billion yuan, which was specifically used to replenish capital.

In 1999, 1 trillion and 400 billion yuan assets were stripped to the newly established four Asset Management Co, and two was to improve the internal management of state-owned banks.

We should abolish the scale of loans, implement asset liability ratio management and risk management, reform and improve the capital replenishment mechanism of state-owned commercial banks and the system of extracting and cancelling bad debts and bad debts reserve, and expand the pilot reform of the 5 level classification of loan quality.

In 1998, the people's Bank of China carried out a major reform in the management system, withdrew the provincial branches, and set up nine branches across the province, which enhanced the authority and implementation of the central bank's monetary policy implementation.

The four is to prevent financial risks. In 1999, we began to rectify financial institutions such as credit cooperatives, trust and investment companies, and shut down a number of risky institutions such as Hainan Development Bank and Guangdong International Trust and investment company.

Demonstration of US stocks and demonstration effect of US internet bubble.

In July 17, 1995, the NASDAQ index broke through the 1000 point mark for the first time, and began to go wild. In March 9, 2000, the NASDAQ first broke through 5000 points, and in March 10, 2000, it created a record high of 5048.62.

The hurricane of the NASDAQ also led to the craziness of Chinese Internet stocks at that time.

There are fewer types of asset allocation for residents.

In 1999, there are no alternative investment channels such as trust, banking, real estate and so on. The asset allocation of residents is mainly limited to bank deposits and stock markets.

519, the real estate market reform in China has just started, and the real estate market that accommodates huge amounts of capital is still in its embryonic stage, and there is no money making effect and absorptive capacity.

Under the influence of continuous interest rate cuts, the attractiveness of bank deposits to residents also declined.

In this case, the stock market has become a capital export.

519, the market lasted for more than two years. By the end of June 14, 2001, the Shanghai Composite Index has broken through the integer pass since 1047, and hit a new high of 2245 points, or nearly 114%, and again appeared the second wave of "reforming cattle" and "pforming cattle".

519 bull market, the hot market level is distinct, technology stocks, Internet stocks, blue chip stocks and large index stocks took turns in the lead, deep technology, Oriental Pearl, deep development, Sichuan Changhong and other leading shares contributed to the market.

Performance shares and ST shares are mostly in place, until the market peaked, only to go out of the market and most of the gains are very limited.

The most surprising share is Haihong holdings.

From May 19, 1999 to August 6th, it experienced the first climax of its rise, which rose from 11.2 yuan to 23 yuan in less than three months and increased by 93.97%. From the beginning of March 16th to the beginning of March 16th, the stock soared again, rising from 18.7 yuan to 82.78 yuan in three months, and the cumulative increase was as high as 299.84%.

Other technology stocks and Internet stocks have also been fired, such as Oriental Pearl, Shanghai Mellin, comprehensive arts shares, Tsinghua Tongfang, Orient Electronics, etc., from the market fanaticism of the virtual economy, and its rise is mainly dependent on the conceptual hype.

Benefiting from policy support, the 519 market broke out and produced a bull market that lasted for more than two years. However, it became a policy and a losing policy.

Monetary tightening.

There was no reduction in interest rates between June 10, 1999 and February 2002, and it was gradually raised after November 1999.

The SFC launched a regulatory storm.

In the 519 period, stock market behavior prevailed, which led economist Wu Jinglian to throw out the "casino theory". He raged the stock market and raised the call of the Chinese stock market.

As for some bad phenomena in the stock market, regulators have been unable to sit idly by. When Shi Meilun, chairman of the securities and Futures Commission, began to crack down on the market behavior of the stock market and set up a regulatory storm aimed at strengthening the governance of listed companies.

Under tremendous pressure.

In the first year of his appointment, regulators raised a regulatory storm aimed at strengthening the governance of listed companies.

There are 51 regulations or regulations on securities supervision promulgated by the China Securities Regulatory Commission. More than 80 listed companies and more than 10 intermediaries are publicly condemned, administrative penalties and even filed for investigation.

Reduction of state-owned shares.

In June 14, 2001, the way to reduce state-owned shares became the last straw to overtake the bull market.

At that time, Xiang Huaicheng, Minister of finance, said: "the reduction of state-owned shares is a positive factor."

However, the reduction is in disguised form of apportionment and expansion. China's stock market has begun to expand too much. Although the stock market has been weakening, the amount of financing has reached 40% of the total amount of financing in the past 15 years, which has also put great pressure on the market.

Finally, the stock market went on the "bear" road without hesitation.

Trigger: the rise of Internet and digital appliances

Opportunities for the development of the electronics industry.

Driven by the tide of Internet and digital home appliances in the 90s of last century, Taiwan's electronics industry is even higher.

At this stage, the OEM (OEM) and ODM (design and manufacture) of Taiwan's electronics industry have increased significantly, and have gone deep into PC, servers, PDA, digital cameras, disk drives, projectors and other products, as well as USB, Bluetooth, Wi-Fi wireless connection equipment, etc., and are moving towards high-end wafer processing, LCD panel production, IC design services and other fields.

The electronics industry is developing rapidly.

Industrial production increased by 7.51% in 1999, a new high in the past 12 years, mainly due to the strong growth of high-tech industries.

Among them, the electronic equipment industry is the best, with an annual growth rate of 25.91%.

The annual growth rate of manufacturing industry is 7.87%.

In the information industry, the output value of hardware industry at home and abroad was 39 billion 881 million US dollars, an increase of 18.1%, 6.2 percentage points higher than that in 1998. The output value of hardware on the island was 21 billion 23 million US dollars, accounting for 52.7%, and the output value of the island was 18 billion 858 million US dollars, accounting for 47.3%.

Among them, the output of notebook computers reached 9 million 355 thousand, and the first production of the two computers ranked first in the world, accounting for 49% and 57% of the world's total output respectively.

The output value of the software industry is NT $95 billion 437 million, an increase of 30% over the previous year.

Monetary policy is loose.

From the three quarter of 1998, the growth rate of money supply continued to accelerate, while the interest rate of money market continued to decline from 7.31% in January 1998 to 4.85% in January 1999.

Approaching the general election, political performance is needed.

With the "general election" approaching in Taiwan in 2000, the Taiwan authorities mobilized the bank group to enter the market with the "government fund", and with the cooperation of the foreign investment platform, the Taiwan stock market recovered again. In February 9, 2000, the Taiwan stock market stood at third points.

In the beginning of the election, the political situation was unstable and the burst of the Internet bubble of the NASDAQ superimposed on the US. The stock market in Taiwan plummeted.

First, Taiwan shares reached a 10256 point height in February 17, 2000, but fell a week before the presidential election.

In March 13th, Taiwan shares fell 618 points, or 7%, the biggest drop point record in Taiwan's history ever since, with a total of 444 homes.

In the first trading day after Chen Shuibian was elected, Taiwan stock market plummeted 227 points, down 3%, and 457 stocks fell.

Second, due to the lack of experience of the DPP for the first time, the political turmoil in the island has been triggered.

Taiwan stocks plunged more than 2000 points in two months, breaking even 6000 points and 5000 points.

Third, the United States

The bubble burst.

The US Nasdaq stock price dropped from more than 5000 to below 1500, and the Taiwan stock market also fell, which accounted for a big drop in the larger electronic stocks.

Loose monetary policy ended.

Since April 2000, the growth of money supply in Taiwan has begun to decline rapidly, and the loose monetary policy has ended.