Vladimir Okhotnikov: FOMO Will Destroy Your Investments

An article “The Greater Fool Theory” is devoted to the mistakes made by private investors and even large companies that had every chance of becoming leaders in their niche category. Vladimir Okhotnikov, an expert in finance, DeFi and blockchain, explains why beginners lose money in the speculative market.

The key factors without which one cannot achieve success in the stock market are considered. In addition, the article helps to understand the reasons why such well-known projects as Pets.com, WorldCom and Boo.com failed.

As Vladimir explains, “The Greater Fool Theory” gives a clear idea of ​​the behavior of the crowd. During hype periods, people, especially newbies, rush to buy rising houses or stocks in the hope of selling them at a much better price.

The higher the excitement, the more buyers. But any purchase means that the seller finds a “fool” - someone at whose expense he will make a profit. Then the bubble bursts, after which the final buyers, who are always the overwhelming majority, are left with a rapidly depreciating asset in their hands.

The expert reveals the reasons for this behavior of inexperienced buyers and gives advice on what exactly to rely on when choosing a more reasonable strategy in the financial market. In addition, he explains why the losers are always the majority.

“Lost profit syndrome deprives inexperienced investors of the ability to think soberly, placing them in a vicious circle of the same mistakes,” is how Vladimir characterizes one of the consequences of the phenomenon that is commonly called the “Greater Fool Theory.”

Touching on the topic of bankruptcy of many highly promoted startups, Vladimir gives one striking example from the times of the dot-com collapse. The Pet.com project, the largest supplier of pet food in 2000, was remembered for its large-scale advertising campaign, but quickly went bankrupt.

Revealing the reasons for the collapse of Pet.com - a collapse that left thousands of company shareholders penniless, Vladimir Okhotnikov voices one of the key problems as follows: “A business must make a profit. This is the main goal."

While Pet.com went bankrupt due to poor business strategy, WorldCom's failure was entirely different. At the time, it was one of the largest fraud cases in US history, comparable in today's terms to Sam Bankman-Fried's FTX case.

The article concludes with a look at the history of the collapse of Boo.com. Even the fact that this company was preparing to make a genuine revolution in the field of online marketing did not save them. Why Boo.com fell victim to ridiculous mistakes can be found in the author’s article about the greater fool. 

About Vladimir Okhotnikov

Vladimir Okhotnikov is the author of numerous articles and interviews on the problems of the modern global financial system. He is an expert in DeFi, blockchain and metaverses. A libertarian and crypto enthusiast, Vladimir is known for his successful forecasts of the stock and cryptocurrency markets.