The Greater Fool Theory Just Played Out In The Stock Market. Here’s How To Capitalize On The Opportunity.
Oct 18, 2022
Legendary military tactician Sun Tzu changed the way that war and warfare are conducted today. Sun Tzu was a man about whom nothing is known with certainty, but he is best known for his work The Art of War, which serves as a manual for winning wars and conflicts. “Therefore, those who win every battle are not really skilled—those who render others’ armies useless without fighting are the best of all,” Sun Tzu wrote in The Art of War. This “fighting without fighting” is much more of a mental contest than an actual physical fight.
The stock market is always difficult to navigate. Investing is a lot like getting ready for battle. Both entail evaluating one’s positions, strategizing, conducting in-depth research, managing risks, creating scenarios, and more. Sometimes it will lead you to believe it’s easy. According to the Greater Fool Theory, one can profit from a market bubble by purchasing overpriced assets and later selling them for a profit because there will always be buyers prepared to pay a greater price. Speculators subscribing to the Greater Fool Theory could be left holding the bag after a correction. The number of new investors coming to the market in the last two years who claimed it was easy and are now back at their day jobs received this hard lesson.