The financial markets facilitate trade with people not yet born. If you buy a stock and sell it twenty years later, there is a good chance the buyer wasn’t alive when you made the purchase. When you buy the stock for the long-run, you are betting that the buyer, twenty years from now, will pay more than you did. And the buyer is making the same forecast about the whims of some other buyer in the yet more distant future. This never-ending chain of market trades leads to the possibility that self-fulfilling prophecies lead to inefficient cycles of booms and crashes.
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