Greater Fool Theory

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Dictionary Says

Definition of 'Greater Fool Theory'

A theory that states it is possible to make money by buying securities, whether overvalued or not, and later selling them at a profit because there will always be someone (a bigger or greater fool) who is willing to pay the higher price.
Investopedia Says

Investopedia explains 'Greater Fool Theory'

When acting in accordance with the greater fool theory, an investor buys questionable securities without any regard to their quality, but with the hope of quickly selling them off to another investor (the greater fool), who might also be hoping to flip them quickly. Unfortunately, speculative bubbles always burst eventually, leading to a rapid depreciation in share price due to the selloff.

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'Greater Fool Theory'

  • 7 Controversial Investing Theories

    http://www.investopedia.com/articles/financial-theory/controversial-financial-theories.asp
    ... Greater Fool Theory The greater fool theory proposes that you can profit from investing
    as long as there is a greater fool than yourself to buy the investment ...

  • Triple Screen Trading System - Part 4

    http://www.investopedia.com/articles/trading/03/052803.asp
    ... The problem with buying in a runaway uptrend is that you are betting on the greater
    fool theory, which states that your profit will be realized only by ...

  • Stock-Picking Strategies: Fundamental Analysis | Investopedia

    http://www.investopedia.com/university/stockpicking/stockpicking1.asp
    ... Greater Fool Theory One of the assumptions of the discounted cash flow theory is
    that people are rational, that nobody would buy a business for more than its ...

  • Massive Hedge Fund Failures

    http://www.investopedia.com/articles/mutualfund/05/HedgeFundFailure.asp
    ... overpriced tech stocks that offered nothing but inflated price to earnings ratios
    and no sign of profits on the horizon, the greater fool theory prevailed and ...

  • Is All That Glitters Gold? - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0811/Is-All-That-Glitters-Gold.aspx
    ... Gold bubble? Most bubbles start completely unnoticed, but pick up steam under
    what is known as the "greater fool" theory. This occurs ...

  • Market Cycles: The Key To Maximum Returns

    http://www.investopedia.com/articles/technical/04/050504.asp
    ... At this point, the greater fool theory prevails. Valuations climb well beyond
    historic norms, and logic and reason take a back seat to greed. ...

  • 5 Steps Of A Bubble Slideshow | Investopedia

    http://www.investopedia.com/slide-show/5-steps-of-a-bubble
    ... prices skyrocket. The "greater fool" theory plays out everywhere. Valuations
    reach extreme levels during this phase. For example ...

  • Can Smaller Miners Become Big Winners In The Gold Rush?

    http://stocks.investopedia.com/stock-analysis/2011/Can-Smaller-Miners-Become-Big-Winners-In-The-Gold-Rush-GLD-ABX-NEM-IAG-EGO-AUY-GG0429.aspx
    ... by fears of inflation, economic and political turbulence, technicals, or even just
    a "greater fool" theory, the reality is that it has been a winning trade. ...

  • 5 Stocks To Get In On The Gold Rush

    http://stocks.investopedia.com/stock-analysis/2011/5-Stocks-To-Get-In-On-The-Gold-Rush--GLD-AEM-AU-ABX-GG-NEM0428.aspx
    ... interest in gold is fueled by fears of inflation, economic and political turbulence,
    its technicals, or even just a "greater fool" theory, the reality is that ...

  • 5 Steps Of A Bubble Slideshow | Investopedia

    http://www.investopedia.com/slide-show/5-steps-of-a-bubble/bubble-characteristics.aspx
    ... prices skyrocket. The "greater fool" theory plays out everywhere. Valuations
    reach extreme levels during this phase. For example ...

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