Greater Fool Theory

The Greater Fool Theory is an investing concept that suggests that the price of an asset can continue to rise as long as there is a “greater fool” willing to buy it at a higher price. This theory suggests that investors can make money by buying an asset at an overvalued price and then selling it to someone else at an even higher price, even if the asset is fundamentally overvalued.

This theory is often associated with market bubbles, where prices rise rapidly and then crash as more investors realize that the prices are not sustainable. Critics of the Greater Fool Theory argue that it can lead to speculation and irrational investment decisions and that it is ultimately unsustainable in the long run.

It’s important to note that this theory doesn’t necessarily mean that the asset has no value, but that the value is being driven by market speculation, hype, and emotional buying rather than fundamentals. It is also important to note that this theory is not a reliable way of making investment decisions.