Practice English Vocabulary Exercises – Vocabulary for Banking and Finance: The dot.com bubble

1   At the height of the high-tech stocks goldrush, private investors were piling money into internet and technology companies. In many cases, these were little known businesses that had been in existence for only a few months. Nevertheless, investors were hungry for stocks, with many buying large holdings simply on the basis of wildly optimistic internet bulletin boards tips.

2   Then in March and April 2000 share prices crashed. A lucky minority had got out in the nick of time, but the majority of dot-com investors suffered substantial paper losses. Looking back at the frenzy that led up to the crash, it now seems amazing that so many were taken in by the glitter of fool’s gold, and were willing to part with their cash so readily. Dot-com shares doubtless seemed to many to be a casino where they couldn’t lose, but as the old saying goes, “If it seems too good to be true, it probably is”.

3   London Stock Exchange figures show how cheap online share-trading services caused net-based share-dealing to rocket in the months leading up to the crash. The average number of transactions ballooned to 134,000 a day in January, and hit a peak of 157,000 a day in March – just days before the first signs of disaster.

4   Many of the new share-dealing services were struggling to cope with the demand, and some had to close their doors to new customers. There were numerous complaints from investors having to wait on the phone for an hour or more to get through to a broker.

5   Following the crash, high-tech stocks continued to be traded, of course. But many investors, nursing burnt fingers, pulled out of the market altogether. Others scaled down their trading. The result was a dramatic drop in trading volumes. In the May following the crash, transactions were down to around 100,000 a day, with subsequent months mostly seeing further declines in the number of shares changing hands. In other words, there was a full-blown slump.

6   Although the party was over for private investors, online share-dealing services mostly continued to be profitable, with many new companies joining the already crowded market.

7   However, despite the fact that there was still money to be made, shares in the sector fared poorly, and in late 2000 some were standing at just a tenth of their value prior to the crash – comparable losses to those seen by the dotcoms whose shares they had once been trading so frenetically.

8   In the years following one of the most talked-about crashes in recent history, some investors who hung on to their shares have partially recouped their losses, particularly when smaller companies have been bought out by larger ones. In the majority of cases, though, the recovery has been modest, and accompanied by a strong sense of caution in investors. It general it can be said that the bubble has well and truly burst.

A. Choose the definition which is closest to the meaning in the article.

1   gold-rush (paragraph 1)

     a lots of people investing

     b lots of people making money

2   online bulletin board tips (paragraph 1)

     a advice from internet services

     b information about internet services

3   share prices crashed (paragraph 2)

     a share prices fell dramatically

     b share prices stopped rising

4   paper losses (paragraph 2)

     a losses of banknotes

     b losses of money which never really existed

5   fool’s gold (paragraph 2)

     a good profits for stupid people

     b something worth much less than many people believed

B. Find words in the article with the same meaning as the following.

6   only available on the internet (paragraph 3)      n………………-b………………

7   reduced (paragraph 5)      s……………… d………………

8   being bought and sold (paragraph 5)      c……………… h………………

9   taken over (paragraph 8)      b……………… o………………

C. Complete the definitions.

10   Investors piled money into the market means that people …

        a invested cautiously      

        b invested heavily      

        c invested all their money

11   People parted with their cash readily means that people were…

        a able to spend money      

        b spending too fast      

        c happy to spend their money

12   Small investors got their fingers burnt means that small investors…

        a were unhappy      

        b were cheated      

        c lost money

13   There was a drop in stock exchange trading volumes means that …

        a fewer shares were traded      

        b more shares were traded      

        c many shares went down in value

14   Many investors pulled out of the market altogether means that many investors…

        a sold all their shares      

        b stopped buying shares      

        c sold their shares at the same time

15   In financial terms, the party’s over means that it’s no longer possible to…

        a enjoy making money      

        b make money easily      

        c lose more money

16   Investors have partially recouped their losses means that investors have got…

        a all their money back      

        b most of their money back      

        c some of their money back

D. These sentences use vocabulary from the article. Write “up” or “down” next to each.

17   share prices rocketed.      …………………..

18   share prices slumped.      …………………..

19   share prices recovered.      …………………..

20   share prices hit a new peak.      …………………..

21   share prices soared.      …………………..

22   share prices dropped dramatically.      …………………..

23   share prices ballooned.      …………………..

24   share prices crashed.      …………………..

25   There was a sizeable drop in share prices.      …………………..