Greater Fool Theory
A joke says: In India, Gold prices can never fall too much.
Why, because if Gold prices are going up, people👩👩👦👦 buy Gold so that they can buy it cheap and sell it later at higher prices💰 (It’s becoming costlier!!!)
On the other hand, if Gold prices are coming down, people buy Gold because it has never been this cheap, so there was never a better time⏰ to invest in Gold.
And beat this, Gold is of no use to anyone!!!
This behavior is explained by “Greater Fool Theory.”
The Theory says: It doesn’t matter if your investment is cheap or costly💸 till the time you can sell it at a higher price💲to someone else. In short, even if you were a fool to buy it at a high price, there is always a bigger fool to buy it at an even higher price.
Recently, this applied to Real Estate wherein people bought land/apartments🏠 at exorbitant prices because they believed that prices will never come down and they can always sell it to a ‘Bigger Fool.’
However, during the recession (Bad economic times), this cycle🚲 breaks and then only those people who bought assets at ‘fair prices’ make profits.
And you thought Economics was boring!!!😒
What is Greater Fool Theory
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