2002
DOI: 10.1093/oxrep/18.3.265
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Abstract: This paper provides an analysis of some existing as well as new evidence of the relation between market prices and fundamentals in the internet sector over the period January 1998 to February 2000. Appealing to results across a broad class of outcomes, we demonstrate a strong, circumstantial case against market rationality In particular, we investigate (i) the level of internet stock prices given their underlying fundamentals, (ii) responses of stock prices to information-based events, and (iii) the volatility… Show more

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Cited by 90 publications
(30 citation statements)
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References 70 publications
(65 reference statements)
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“…At the same time, it may sometimes take quite a long time for either the facts to become sufficiently clear (see e.g., Zuckerman 28 A related problem was that many issues had relatively limited "float"-i.e., shares outstanding, which could be borrowed by short-sellers. The expansion of such float seems to have been an important trigger for the popping of the Internet stock bubble (see Ofek and Richardson 2002;Chen et al 2002).…”
Section: Contrarianism Ii: Objective Constraint From Valuation Entrepmentioning
confidence: 99%
“…At the same time, it may sometimes take quite a long time for either the facts to become sufficiently clear (see e.g., Zuckerman 28 A related problem was that many issues had relatively limited "float"-i.e., shares outstanding, which could be borrowed by short-sellers. The expansion of such float seems to have been an important trigger for the popping of the Internet stock bubble (see Ofek and Richardson 2002;Chen et al 2002).…”
Section: Contrarianism Ii: Objective Constraint From Valuation Entrepmentioning
confidence: 99%
“…Ofek and Richardson (2002) estimate that at the peak, the entire internet sector, comprising several hundred stocks, was priced as if the average future earnings growth rate across all these firms would exceed the growth rates experienced by some of the fastest growing individual firms in the past, and, at the same time, the required rate of return would be 0% for the next few decades. By almost any standard, these valuation levels are so extreme that this period appears to be another episode in the history of asset price bubbles.…”
Section: Introductionmentioning
confidence: 99%
“…The value placed by investors on many of these companies was based entirely on distant projected earnings, whereas most made no current profit at all, with some not even making any current sales (Ofek and Richardson, 2002). However, in March 2000, the bubble burst with NASDAQ eventually falling 78% in value by October 2002.…”
Section: Figure 3 the Transmission Mechanism Of The East Asian Financmentioning
confidence: 99%