Comment by wpietri

Depends on which proposition. Remember that that once they've sold it, they have no further exposure. So if what's happening is looting a company, then as long as they get out before the rot becomes obvious, they don't care.

And no investor has to be stupid for this to work. You just need some investors who are smarter, better informed, better prepared, or more experienced than others. And that's no presumption at all. If you talk to experienced people in the industry, they know that their living comes out of the pockets of other people's pockets. Literal billions of dollars are invested every year in being the winner in zero-sum games in finance.

That said, plenty of investors are stupid and/or naive enough. Boeing's a fine example here. As it WeWork. Or DJT. Or literally any pump and dump or Ponzi scheme. Or nearly all of crypto.

If you're really struggling to understand this, I suggest Dan Davies' "Lying for Money". Because parasitical actors assuming that investors are stupid enough is a huge, multi-century activity.