Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble

The Capital Markets as an Engine of Progress

The dot-com bubble was the result of the introduction of a new technology (the Internet as a platform for doing business) to the investing public. The capital markets' role according to economic theorists is to channel money into companies that support new technology through products and services, and thus build the new platform. To do this, capital markets raise money and bring promising new companies—via initial public offerings once companies are out of the high risk venture capital stage—to the general public that gets involved as investors. The public is also involved as customers to many of the new companies.

The capital markets are serviced by banks, mutual funds, and other financial institutions ...