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The greater fool is a street term to describe investors in hepped up market who would buy property even at a high price allowing the seller to profit even when the latter had overpaid for it in the first place.
Thus, the seller is the fool for buying the property initially, but the new buyer is the greater fool.
While the greater fool theory sounds ridiculous, this investment behavior is still widespread today as markets continue to be driven by emotions instead of rationality and calculated risks.
That’s not to say that it’s a sure-lose investment.
Savvy investors are well-known to participate in bubbling markets and emerge with extraordinary profits.
The key is to exit at the peak or before everything comes crashing down.
This greater fool behavior is very prevalent in the stock market and the real estate industry.
Just remember that those who hold will be the one to lose their shirts. Inevitably being the ones who the winners profit from.