Greater fool

The greater fool principle for buying an over-priced investment is that investors are being sufficiently irrational to justify expecting that it will be possible to sell at a profit to a "greater fool".

The greater fool principle is most often true during investment bubbles.

Regrettably, the greater fool theory can frequently be right and a good strategy, although a risky one as the foolishness can evaporate (during bubbles this leads to a crash), and prices rapidly fall to more rational levels.

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