greater fool theory

(redirected from Bigger fool theory)
Also found in: Wikipedia.

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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
The report added that the more the jump in valuation, the more is the effect of the bigger fool theory, and that is why many financial advisors suggest waiting at least 90 days before buying a new stock.