Editing Greater fool theory (section)

{{Short description|Theory that the price of an object is determined by consumer demand}}
{{Use dmy dates|date=January 2023}}
In finance, the '''greater fool theory''' suggests that one can sometimes make money through [[speculation]] on overvalued {{nowrap|assets{{hsp}}{{mdash}}}}{{hsp}}items with a purchase price drastically exceeding the intrinsic value{{hsp}}{{mdash}}{{hsp}}if those assets can later be resold at an even higher price. 

In this context, one "lesser fool" might pay for an overpriced asset, hoping that they can sell it to an even "greater fool" and make a profit. This only works as long as there are enough new "greater fools" willing to pay higher and higher prices for the asset. Eventually, investors can no longer deny that the price is out of touch with reality, at which point a sell-off can cause the price to drop significantly until it is closer to its fair value, which in some cases could be zero.<ref>{{Cite web |title=Greater Fool Theory Definition - What is Greater Fool Theory? |url=http://www.investorglossary.com/greater-fool-theory.htm |access-date=6 March 2015 |publisher=Investorglossary.com |archive-date=2 April 2015 |archive-url=https://web.archive.org/web/20150402094702/http://www.investorglossary.com/greater-fool-theory.htm |url-status=dead }}</ref><ref>{{Cite web |title=What is greater fool theory? definition and meaning |url=http://www.businessdictionary.com/definition/greater-fool-theory.html |url-status=dead |archive-url=https://web.archive.org/web/20071223051453/http://www.businessdictionary.com/definition/greater-fool-theory.html |archive-date=23 December 2007 |access-date=6 March 2015 |publisher=Businessdictionary.com}}</ref><ref>{{Cite web |last=Fox |first=Justin |date=11 June 2001 |title=When Bubbles Burst Tulips. Dot-coms. Hey, manias happen. But most don't lead to economic disaster. - June 11, 2001 |url=https://money.cnn.com/magazines/fortune/fortune_archive/2001/06/11/304604/index.htm |access-date=6 March 2015 |publisher=CNN}}</ref><ref>{{Cite web |last=Bogan |first=Vicki |title=The Greater Fool Theory: What is it? |url=http://bogan.dyson.cornell.edu/doc/Hartford/Bogan-9_GreaterFools.pdf }}</ref> The last "fools" to purchase in on the product in question are then left [[holding the bag]], allowing earlier, lesser fools to make off with the profit.