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Special Report on

The Greater Fool Theory

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The most dramatic financial meltdown since the Great Depression occurred despite recent advances in risk management techniques. Because of a fervent but unfounded belief in some quarters that VaR (value at risk) measures worst-case scenarios, financial institutions were exposed to crippling losses when VaR models failed to anticipate the extent of potential price movements, in some cases by whole orders of magnitude. Regulators, bank executives, and risk managers may now be tempted to reject the VaR construct as a theory that has, at best, a tenuous connection to reality. But they need to examine whether the methodology ...
operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going. The system is destined to collapse because the earnings, if any, are less than the payments to investors. Usually, the scheme is ...
The Greater Fool Theory - Hope to Prosper
If you have ever purchased a stock, real estate or an item on Ebay for more than it was worth, you may be a victim of the Greater Fool Theory.  The Greater Fool Theory is based on the belief that even if you pay more than an item is worth, you can always sell it to someone else for even more.  The problem with this theory is that you may become the greatest fool and get stuck with the item at the highest price. My inspiration for writing this post came from the many complaints I see on personal finance blogs about how real estate and the stock market are such poor investments.  And, as I read the details of these posts and ... market research, surveys and trends
Houseless — Greater Fool – The Troubled Future of Real Estate
Well, after staying home with our kids for 4 years, Garth, I regularly say I’ll never regret that time with our kids, but look what happened to real estate in that time!   Now, my husband and I who make over $200,000/year still can’t afford to buy a house in the neighbourhood where we rent a house lovely house for $3000/month.  Our kids are well entrenched in the schools, so changing neighbourhoods would be a shame. There’s not a day that goes by that I wonder if we should be diving in like the rest of ‘em.  I regularly wonder who these people are who are buying up $1,000,000 tear downs.  Maybe we should ... market research, surveys and trends


Derivatives Strategy - October'2000: The Greater Fool Theory
When Genius Failed: The Rise and Fall of Long-Term Capital Management. Roger Lowenstein. Random House. $26.95, hardcover. Reviewed by Stephen Rhodes FA truly defining moment in the saga of Long-Term Capital Management occurs early in Roger Lowenstein's compulsively readable account of the rise and fall of the fabled hedge fund, When Genius Failed. Picture this: it's the fall of 1993 and the legendary academic Myron Scholes is making a pitch to the Indianapolis insurance company Conseco, claiming his soon-to-be-operational hedge fund will make boatloads of money in relatively efficient markets by deploying its ... industry trends, business articles and survey research
John Vrooman's reply to the Nashville Predators
reveals how defensive this Predators lame-duck ownership has become. Most of us have nothing to gain or lose in this circus, but this is our town and this is still our team. The Predators personal attack on their own fan-base is self-defeating. The original argument is still valid—the Nashville Predators are not going anywhere, regardless of their ownership. The Predators claim they have lost $70 million since 1999. The question is how such an impoverished franchise could be priced at $220 million, 25 percent above the NHL average. There are only two explanations. First, according to the “greater fool ... industry trends, business articles and survey research
The Great Australian Debt Delusion
f you live in Australia, you had better find some hearing protection: A massive popping noise may be about to shatter the hopes and dreams of millions. A housing bubble of California dimensions could be about to explode. When it does, it will probably take the whole economy with it. Yet Australians don’t seem worried. Californians used to feel the same way too. Renting is just throwing money away. Buying a house is the best investment a person can make. Immigration is fueling demand. They aren’t making any more real estate. Better buy now or you will be priced out of the market forever. These were the things that ... market trends, news research and surveys resources
5 Steps Of A Bubble
The term "bubble," in the financial context, generally refers to a situation where the price for an asset exceeds its fundamental value by a large margin. During a bubble, prices for a financial asset or asset class are highly inflated, bearing little relation to the intrinsic value of the asset. The terms "asset price bubble," "financial bubble" or "speculative bubble" are interchangeable and are often shortened simply to "bubble." Bubble Characteristics A basic characteristic of bubbles is the suspension of disbelief by most participants during the "bubble phase." ... market trends, news research and surveys resources


11: The Dot-Com Bubble Of The 1990s and Its Lessons For the ...
presents an even larger threat for the 'greater fool theory' as people feel more secure investing in real estate and taking on large mortgages to pay for it ... technology research, surveys study and trend statistics
CFTC Agricultural Advisory Committee Meeting July 29, 2008
Jul 29, 2008 ... Greater Fool Theory (Can always sell it to someone else for more). – Herding ( Investors buy or sell in direction of market ... technology research, surveys study and trend statistics
Taxi Drivers and Beauty Contests
sometimes called the “greater-fool theory,” because even though you're a fool to pay as much as you did, you're betting that there's a greater fool just ...
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Why do people take their money out of the stock market, then ...
If people just left their money in the stock market, buisness wouldn't loose a ton of money, meaning business would survive, and people make money. Also, when something happens like 911, who decides, or what makes people take their money out? I mean, if people just leave their money in the stock market, the value of the shares can't go down. The reason the stock market is so bad, is because EVERYBODY freaks and takes their money out. Those choices are costing the business money, which then cant produce as much product. 1 year ago you are right, i am sure you have put every penny in stocks. persuade your ...