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User-840664

04/21/24 2:59 PM

#686329 RE: W_W #686326

Sell it to whom? Lesser fools vs. Greater fools.....
In finance, the greater fool theory suggests that one can sometimes make money through speculation on overvalued assets?—?items 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 "lesser 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. The last "fools" to purchase in on the product in question are then left holding the bag, allowing earlier, lesser fools to make off with the profit.