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While the greater fool strategy may generally be a losing one over enough iterations and time, it is very possible to make huge money on these plays in the shor

by anm89 6y ago

While the greater fool strategy may generally be a losing one over enough iterations and time, it is very possible to make huge money on these plays in the short term. It is not always irrational to buy into an overpriced asset. For example GME was wildly overpriced at $100 relative to basically every metric and yet it would have been an incredible buy. I'm not advocating that anyone actually do this, I'm just saying that you are over simplifying by only acknowledging the value side of the equation.

acct776 6y ago
> GME was wildly overpriced at $100 relative to basically every metric and yet it would have been an incredible buy. Can confirm.
betterunix2 6y ago
The problem is that you need to sell quickly to take advantage of a short squeeze, and the people who bought at $200 could have made a big pile of money last week -- but if they still have those shares today, they will probably never recover their losses. Right now GME is trading at slightly more than $100/share, and while it might spike again tomorrow it will probably continue to decline. The squeeze is over and by now the remaining shorts are hedge funds who sold when the share price was above $300.