What is “The Greater Fool Theory”?
The greater fool theory argues that:
1. The reason rotten meat sells is that fools must come to the market daily.
2. In trade, prices go up because people (fools) are able to sell overpriced securities to a greater fool whether or not they are overvalued – until there are no fools left.
3. The theory implies that (fools) investors are most likely to ignore valuations, earnings reports and all other data as well as the fundamentals that involve understanding and company ownership when investing in an asset.
In a nutshell, Ponzi is the base of the Greater Fool Theory.
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