A name I made up to express an important idea that many people kind of sort of know intuitively. Don’t risk a lot of money on an investment, bet, or purchase, that appears to be a great deal, unless you can figure out why the people taking the other side are doing it, and why their reasons shouldn’t concern you.
While FTOI technically applies to almost any transaction I mainly apply it to the financial markets, sport’s betting, and horse betting. If you are buying shoes, the reason someone is willing to depart with the pair you are interested in is probably simply because he has 40 more of them. And even in the financial markets, people may be willing to take the other side not because they disagree with you, but rather for tax reasons, hedging reasons, or taking profits reasons. But most of the time it is in fact that the market, on average, has a different opinion and disagrees with your buy, sell, or short sell.
The two main ways you can find yourself in a situation where the other side doesn’t share your opinion would be if you know some fact about the security, team or horse that they don’t, or if you know a technique to evaluate those entities that they don’t. I actually know of a few people who believe in this concept to such a degree that their bets or investments are based not on their judgement that the readily available information suggests a bet but rather that it definitely doesn’t! In other words, they restrict their bets to the obviously bad ones. Their talent lies not in predicting what the correct price SHOULD But rather what they expect it WILL be. And if it’s not, they bet the same way as the market which on the surface has erroneously priced it.
In general, if something sounds too good to be true, then it is probably not true.
If it someone that you have a lot of trust in, like a family member or good friend, and that person is offering you something that is way above what seems reasonable, then then there might be some future expectation of you that may be problematic when you are older. It might be difficult to ask if this person has an ulterior motive,
because he/she/they could be hurt or even act like they are hurt that you would question them.
If it someone else, then ask a lot of questions, tell him/her/them that you need to think about it, get opinions from other people.
If they say this deal is now or never, I would definitely walk out the door and never look back.