greater fool theory
Bubble investment logic
The greater fool theory holds that you can profit from an overpriced asset by selling it to someone willing to pay even more—the "greater fool." The theory explains speculative bubbles: buyers don't care about intrinsic value because they expect to find another buyer before prices collapse.
Bitcoin critics say it's pure greater fool theory.
The strategy works until you become the last fool holding the bag.
- bag holderInvestor stuck with losses
- hot potatoRisky topic avoided
- musical chairsCompetitive seat-grabbing game
- asset bubblesUnsustainable price inflation
- intrinsic valueWorth independent of circumstance
herd mentality · speculative trading · sunk cost · confirmation bias · market volatility · tulip mania · meme stocks · irrational exuberance · exit strategy · house of cards · pyramid scheme · opportunity cost · risk tolerance · arbitrage · short selling · liquidity crisis · bear markets · gambler's fallacy