Question

explain the message from the below term in the context of the role played by the mutual fund managers in the dot com crash in 2000

Answer 1

At the time of 2000 dot com crash, mutual fund managers were exploiting the interest of all the the investors who are investing into the mutual fund because there was a herd mentality of investing in the mutual fund CEO there was the belief that these funds are always going to provide exceptional rate of return so the managers were already knowing about the over valuations and excessive valuations which cannot be sustained in the long run but they have an obligation of being invested into the market so they were invested in the market and they were justifying being invested into the market.

There is always a fear of missing out factor which will be playing at the time of excessive valuations and These euphorias are always living markets to higher valuations so mutual fund managers are sceptical about the valuations but they want to remain invested into the market because the fund were coming to them from the public as the public were highly optimistic and they felt that this market is not going to correct so this is a statement which is in regards to the herd mentality of general public.