Planning · Video
The “Greater Fool” Trap Investors Keep Falling For
With Colin Meeks, CFP® · Published November 11, 2026
What this one covers
Every few years, a new investment fad draws attention, from 17th-century Dutch tulip bulbs and railway booms to dot-com stocks and more recent speculative crazes. In this monthly check-in, Colin Meeks, CFP® looks at the psychology behind speculative bubbles and the “greater fool” idea: prices can keep rising on momentum alone until buyers run out.
He also explains why an asset that does not generate earnings relies on market sentiment for its price, and contrasts that with owning a piece of a business. Productive companies may reinvest capital, innovate, create jobs and return profits to shareholders, though every approach carries trade-offs and all investing involves risk, including loss of principal.
Colin closes with a discipline rather than a prediction: invest in what you understand and stay the course. That is a principle for thinking about long-term investing, not a guarantee of any result. If you would like to talk through your own situation, which we coordinate with your attorney and tax advisor, you can schedule a 15-minute call.
Key topics and timestamps
- 0:00When Will the Next Investment Fad Pop Up?
- 0:301637 Tulip Mania: A Lesson in Speculative Excess
- 1:30The Psychological Trap: Price vs. Underlying Value
- 2:00From Rail Booms to Dot-Coms and Pixelated NFTs
- 2:25Assets That Do Not Produce Earnings
- 3:07Why Productive Businesses Are Different
- 3:50Momentum vs. Economic Engines
- 4:30Staying the Course: Advice for Long-Term Investors
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. Maryland Financial Advocates and LPL Financial are separate entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. The fast price swings in commodities will result in significant volatility in an investor's holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors. All investing involves risk including loss of principal.
Takeaways
- Tulip Mania, the dot-com era and other speculative bubbles share a recurring psychological trap
- Buying solely on momentum relies on the “greater fool” idea rather than underlying value
- An asset that does not generate earnings relies on market sentiment for its price, which adds risk
- Owning part of a productive business is different from holding an object, though businesses carry risk too
- Investing in what you understand and staying the course is a discipline, not a guarantee
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