The bigger fool theory refers to the capital market (such as stock market and futures market): people are willing to pay a high price for something, regardless of its true value, because they expect a bigger fool to buy it from them at a higher price. The most important truth that the bigger fool theory tells people is: In this world, being stupid is not terrible, but being the last fool is terrible.

brief introduction

The bigger fool theory refers to buying stocks at high prices and selling them quickly when the market becomes profitable. This operation strategy is usually called fool wins fool by the market, so it can only be applied when the stock market rises. Theoretically speaking, Bo silly also has its reasonable side. Bossy's strategy is that there is a high price above the high price and a low price below the low price. Its rules of the game are like a baton. As long as it is not the last one, it will be profitable. Long-term profit, short-term loss reduction. Only those who receive the last stick will be unlucky.

Theoretical content

1, key

The "bigger fool theory" wants to reveal the motivation behind speculation, and the key to speculation is to judge whether there is a bigger fool than yourself. As long as he is not the biggest fool, he must be the winner, just a matter of winning more and winning less. If there is no bigger idiot who is willing to be your "next home" at a higher price, then you will become the biggest idiot. It can be said that any speculator believes nothing more than the "biggest fool" theory.

According to this theory, some investors in the stock market simply don't care about the theoretical price and intrinsic value of the stock. They buy stocks only because they believe that more stupid people will take over the "hot potato" from them at a higher price in the future. The basis of supporting Bo Silly is that the investment public's judgment on the future is inconsistent and out of sync. For any local or overall news, there are always people who are too optimistic, and there are always people who tend to be pessimistic. Some people act too early, while others act slowly. The difference of these judgments leads to the difference of overall behavior, stimulates the incentive system of the market itself, and leads to the emergence of the phenomenon of stupidity. This is also quite obvious in the China stock market.

Step 2 classify

There are two kinds of stupid behaviors, one is perceptual stupidity, and the other is rational stupidity. The former, when acting, did not know that he had entered a stupid game, nor did he know the rules and inevitable results of the game. The latter, who clearly knows Bos and related rules, only believes that more and more stupid investors are about to intervene in the current situation, so they invest a small amount of money in gambling.

The premise that rational fools can make a profit is that more fools take over, which is the judgment of public psychology. When the investing public generally feels that the current price is already high and needs to be evacuated, the real high point of the market will really come. "Stupidity is not the stupidest thing" is simple to say, but not easy to do, because it is not easy to judge whether there are more and more stupid people. If you are not careful, a rational fool can easily become the stupidest. Who wants him to join the stupid candidate team? Therefore, if you want to participate in Bosha, you must fully study and analyze the mass psychology of the market and control the psychological state.