The Greater Fool

What if you could go back in time and were able to buy any of the following;

  1. tulip bulbs in 1637
  2. shares in the Blue Ridge Holding in 1929
  3. shares in in 2000
  4. shares of Lehman Brothers in 2008

Which would it be?

Obviously you would want to know more information, such as exactly when am I buying and with how much money. The reason that would be important is because each of the above so-called investments had a drop dead date. Those who were unfortunate enough to be still holding on that particular date found themselves pretty much SOL. There was no greater fool to step in and take your place. In fact each of the four pretty much disappeared over the course of time leaving decimation in their wake.

But, and it is a big BUT, if you were fortunate to find that greater fool and get out before reality struck you were very well rewarded. In fact each of those manias would have made you wildly wealthy.

Unfortunately you can’t go back in time but you can learn from it. Each of the above 4 concluded with a last gasp that enticed the smallest investor to climb on board to disastrous results.
If you’re ready to jump in after last week please take a good hard look in the mirror and make sure the greater fool is not looking back.

(If you are not familiar with the above 4 it may be worth your while to refresh yourself)

Written by
With his passion for economics Bill Tatro has been entertaining audiences on the radio and in seminars for decades. Bill is an economist that provides weekly paid content to subscribers, and offers a free daily "lite" version as well.