Too much of what passes for investing in 2021 depends on the greater fool theory. “I may be a great fool to purchase investment ‘X’. but all I need is one greater fool to sell it to at a higher price“.
The amount of speculation going on right now is pretty extreme. Between Bitcoin, Meme stocks, and SPACs, many investors are putting their money down on things that don’t understand. Nor do they really believe they are great investments. They’ve just heard that others made money and they want to get in on the action.
Despite what many believe, stocks and bonds are not a casino. If you want to use a small amount of your money to ‘play’ the latest meme stock, fine. But don’t get caught up in the whole great fool momentum game. Because in that case, it’s highly likely that the great fool is you.