The greater fool effect outside bubbles
Posted by Graeme in Business & Investment at 9:09 am on Wednesday, 2 May 2012
The greater fool effect is well established as a key mechanism that allows bubbles to inflate to ludicrous valuations: investors who know prices are too high keep buying. Prices can stay too high in a similar way outside a bubble: not necessarily massively over-valued or in the context of a broader market bubble. (more…)
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