The most dangerous kind of foolishness rarely arrives in a funny and obvious costume. It slips in quietly, often dressed like due diligence. “Act now,” it murmurs. “Everyone else is already in.” And so we do, not because we’re reckless, but because we’re human. We imagine the fool as someone else, someone credulous, overly eager, probably quoting crypto advice from a stranger’s YouTube channel. But more often than not, the fool is simply us, moments before the spell wore off.

There’s a theory in finance called the Greater Fool Theory, which holds that:

One can make money by buying something not because it is valuable, but because someone else, a greater fool, will come along to pay even more.

And so we begin with tulips. In the early 1600s, the Dutch fell irrationally in love with these delicate flowers. A rare bulb could sell for more than a townhouse in Amsterdam. Not because it produced magical blooms, though they were beautiful, of course, but because others believed it would continue to rise in price. One could not possibly be the last fool, people reasoned. There would always be another. Until, one morning, there wasn’t.

Roughly three centuries on, the tulips had vanished, but the psychology remained entirely intact. This time dressed up in broadband and dot-com addresses. In the late 1990s, we decided, collectively and with remarkable enthusiasm, that profit was a bit old-fashioned. What really mattered, apparently, was “potential.” Companies with no earnings, no coherent strategy, and in some cases not even a postal address, were magically assigned billion-dollar valuations. Pets.com, a company that sold dog food online and shipped it at a loss, became emblematic of the era.

In recent years, we’ve seen this same logic resurface in stranger, more ironic forms. A tweet sold for $2.9 million. A digital image of a rock, quite literally just a rock, fetched more than most homes. NFTs, cryptocurrencies, meme stocks like GameStop, all operated on a shared faith not in value, but in virality.

It wasn’t about believing in the asset, but in the story. And the story was always the same: “This time is different.”

But it never is. Not really.

What’s remarkable about all of this, and what is so often missed in financial post-mortems, is that the fool is not a stranger.

The fool is us, when we fall in love too quickly, when we convince ourselves that the crowd knows better, when we overestimate our timing, or underestimate our needs.

The Greater Fool Theory is not just an economic principle; it is an emotional one, as I see it.

It essentially captures the desperate hope that someone else will rescue our belief, that we won’t be left holding the thing no one wants, whether it’s a stock, a secret, or a promise we shouldn’t have made.

We’ve all done it. Bought into something because it glittered.

Stayed in a job that drained us, because surely it would lead somewhere. Kept dating someone we didn’t love, because leaving felt more foolish than pretending.

The psychology is the same. We fear being the last. The last to sell, the last to leave, the last to admit it wasn’t worth it.

And yet, to be the fool is not the worst fate. The worst fate is never to risk at all. Speculation, if we’re being honest, is just hope in a slightly more expensive suit. Most investments, even the ones we insist are rational, tend to have less to do with spreadsheets and more to do with the rather delicious hope of being early, being right, and ideally, being the person others nod at approvingly over drinks.

We dress it all up in the language of due diligence, talk about fundamentals and forecasts, but really, it’s theatre. Half the time, it’s not about money at all.

It’s about myth.

Less about returns, more about the quiet thrill of playing hero in your own financial fable.

Perhaps, then, wisdom lies not in avoiding foolishness, but in recognising when it has entered the room. In stepping back with a small, sad smile and saying, “Ah, there you are again.” The bubbles will continue. New technologies will dazzle us. Markets will soar and collapse. But if we can meet our delusions with kindness, if we can forgive ourselves for wanting, then perhaps we come out not just poorer or richer, but a little more human.

So the next time you hear of something too good to be true, something rising faster than sense can follow, pause. Not with scorn, but with familiarity. You’ve been there. We all have. And if nothing else, it’s comforting to remember that in the theatre of markets, the fool is never truly alone.