The Greater Fool Theory is a well known investment strategy that says prices go up because people are able to sell overpriced securities to a "greater fool," whether or not they are overvalued. In other words, of course prices fall, but only until there are no fools left (i.e., investors who feel they couldn't make more money off their investments if they sold them now).The greater fool theory argues that prices go up because people are able to sell securities overpriced to a "greater fool," not because they are overvalued. In other words, investors who can't sell their overpriced securities find another unsuspecting buyer. Eventually, the supply of these securities equals demand, but not before one hopeful investor convinces another and another that it's a good idea to buy at a higher price than anyone else is willing to pay.The greater fool theory suggests that overpriced securities could continue to rise in price, as an investor buys them from a "greater fool." Of course, the claim that there can never be a greater fool because supply must eventually be exhausted.The Greater Fool Theory is a hypothesis used to explain why securities are sold at prices higher than they appear to be worth. The theory says that people will sell overpriced assets because they cannot find buyers who will pay an even more exorbitant price. This leads to higher prices and more sales, which in turn lead to still higher prices due to all the investment capital involved in the market.
