Monday, March 11, 2024 10:49:07 AM
Greater fool theory
https://en.wikipedia.org/wiki/Greater_fool_theory
In finance, the greater fool theory suggests that one can sometimes make money through the purchase of overvalued assets with a purchase price drastically exceeding the intrinsic value if those assets can later be resold at an even higher price.
In this context, one "fool" might pay for an overpriced asset, hoping that they can sell it to an even "greater fool" and make a profit. This only works as long as there are enough new "greater fools" willing to pay higher and higher prices for the asset. Eventually, investors can no longer deny that the price is out of touch with reality, at which point a sell-off can cause the price to drop significantly until it is closer to its fair value, which in some cases could be zero.
Everything that I post is just my informed opinion and is simply an invitation to debate. Trade on your own due diligence please..
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