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by cuteboy19
1563 days ago
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The general term should be "greater fools schemes". Ponzi and Pyramid are just subtypes of this. There is also MLM and PnD which have their own characteristics. All of these involve finding more and more people to invest so that early investors can exit. The reason why every greater fools scheme fails is that there is no net revenue (or too small to sustain the scheme). No matter the scheme, you will always run out of greater fools, and so it must collapse eventually. |
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> No matter the scheme, you will always run out of greater fools, and so it must collapse eventually.
That depends on how you define "collapse". After a pump and dump, a stock might crash to zero, or settle back to where it was, or even settle back to a higher number than it was originally at. It doesn't require a particularly large supply of fools, and it only requires them for a small amount of time. And it doesn't have to move the stock price by a huge percentage either.