greater fool theory

Greater fool theory

An investment notion that even when a stock is fully valued by conventional standards, there is room for upward movement because there are enough buyers to push prices farther upward purely on speculation or hype.

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greater fool theory

The theory that no matter what price an investor pays for a security, someone else with less sense will be willing to buy it later. The greater fool theory reaches its height of popularity near the end of a bull market when speculation is high.

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Greater Fool Theory

The idea that there is always a buyer for a security who will pay a better price than the seller paid. That is, the greater fool theory states that if an investor buys a security at a high price, he/she will be able to find a buyer who will pay an even higher price. The origin of the theory's name comes from the idea that if an investor makes a foolish decision to buy an expensive security, he/she can find a greater fool to take it off his/her hands. The greater fool theory is important to the formation and continuation of speculative bubbles, and only works until the bubble bursts.

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greater fool theory

An investing theory that supports buying overvalued property in a hot market because a greater fool will come along and buy it from you at a profit.Like the game of musical chairs,the greater fool theory breaks down when one misjudges when the music will stop and there won't be enough fools (chairs) to go around.