Looking back, it's all so obvious. Basically, "new economy" was a buzzword used to sell the
dotcom hype to gullible investors. People were told that since
web-based businesses were operating in the
new economy, the sensible rules of the
old economy that said that companies without a sound
business plan will fail and that a high stock
price to earnings ratio signifies an artificially inflated stock price that will eventually plummet, did not apply.
This was, of course, a load of bullshit, but the laws of supply and demand dictated that as long as enough people bought into it, it was a smart move to go along with it, even if you knew it was just a short-lived boom, provided you knew when to sell. Of course, this just made the eventual crash even worse.