The Greater Fool Theory
Warning: mysqli_query(): Empty query in
/home/manuel/public_html/subpage.php on line
8480
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, boolean given in
/home/manuel/public_html/subpage.php on line
8482
The "Greater Fool Theory" can be applied to any form of investing, whether it be investing in the real estate market, stock market or otherwise.
The "Greater Fool Theory" is when a person buys an asset not because they think that it is an attractive or undervalued; they are buying it in the hopes that someone else will pay more for it down the road. This is the "Greater Fool Theory".
The end of the first Internet boom was a perfect example of the "Greater Fool Theory" in full effect.
Most people knew that the companies that they were buying were complete garbage with no hope of ever making any money. They didn't care though. They would buy that piece of trash Internet company for $200 in the hopes of flipping it a day or two later for $250. The "Greater Fool Theory". Did they use some complicated analysis to ascertain that this was an undervalued and underappreciated stock? No way. They simply wanted to flip it to a "bigger" fool who was willing to pay more money for the stock.
Home buying in the United States over the past 4-5 years has been an exercise in the "Greater Fool Theory".
Did people really think that the house that they bought for $750k (which was sold for $300k three years ago) was a great long-term investment? In most cases, no. In many cases, people simply bought the home at $750k, banking on the fact that they would be able to "flip" it a year or two later for much more money.
"The Greater Fool Theory" is like musical chairs. When the music stops, someone always doesn't have a seat to sit in. With the "Greater Fool Theory", someone is always left holding the bag at the top. Someone always buys in at the exact top of the market. This goes hand in hand with the saying "Sheep get slaughtered". The herd is almost always wrong. If you truly want to make money over the long-term through investing, you need to develop somewhat of a contrarian attitude and not get sucked in to the magnetic pull of public opinion. Think for yourself.
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, boolean given in
/home/manuel/public_html/subpage.php on line
8527
Filed under:
Stock Market Education |
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14707
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14708
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14709
Warning: mysqli_num_rows() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14711
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14730
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14731
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14732
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14735
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14738
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14739
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14740
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14742
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14762
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14763
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14764
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14767
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14770
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14771
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14772
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14774
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14793
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14794
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14795
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14798
Warning: mysqli_stmt_bind_param() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14801
Warning: mysqli_stmt_execute() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14802
Warning: mysqli_stmt_get_result() expects parameter 1 to be mysqli_stmt, boolean given in
/home/manuel/public_html/subpage.php on line
14803
Warning: mysqli_fetch_row() expects parameter 1 to be mysqli_result, null given in
/home/manuel/public_html/subpage.php on line
14805
