I live in the Uk.

One of my Dad's cousins, who also lives here has been through two divorces.
Fifteen years ago he had two houses.
Today he lives in a single room in my aunt's house.

The market movement is integrally random. It's true that, like most random systems, if you have all the inputs you can probably predict it, but no one has all the inputs.

A model of this random system helps people to improve thier predictions and they invest in the market based on these predictions.

Unlike say a climate model, where if everyone is totally wrong, the weather still does what it wants anyway. With the markets, investors acting based on the results of whatever model they are using are actually changing the reality of the market.

When everyone uses the same model, when the model says "Stock A is a good investment" everyone sees the model and decides it's a good investment, demand increases, price goes up. This information is then fed back into the model. The model now looks at the increased demand and says "A is an even better investment". Everyone looks at this result, demand increases even more and price goes up faster. This information is fed into the model again which now says "Wow! look at the action on that stock it's an absolutely GREAT investment!" Demand goes through the roof and prices soar.

the problem with this is that the people pushing up the prices are the speculators. And all speculators rely on the fact that at the end of all the rigmarole, there will be an actual consumer willing to pay the price they are quoting for the item. According to thier model lots of people are willing to pay the price. But in the real world all the consumers got prices out of the market ages ago. When the speculators now try to sell, prices crash!

when everyone is using a different model, this activity is spread across diffent stocks becuase the initial recommendations vary and so the feedback is watered down. But as more people rely on the same model, the more likely it is that that model will actually begin to become the cause of market movements, rather than a predictor, and the more acute the boom/bust cycles will be.

The same thing could be seen in the housing market (in the UK at least). Long after house prices were way to expensive for the average family (even with a hundred percent mortgage) to buy. Thousands of people were still desperately trying to borrow money to buy a house they couldn't afford. Afterall all the experts were predicting that house prices would rise and they would soon be able to sell it pay off thier loan and make a tidy profit.

The question they all forgot to ask was "Who's gonna buy it?"

Well..., actually this theory may be just as falsifiable as most Intelligent Design ones.

In most inteligent design theories the final piece of evidence to prove o disprove it is easily available after you're dead.

In the case of this model, we probably won't get detection methods good enough to create a less biased sample space until after those of us alive now are dead. So, all in all, we should be able to answer both questions at roughly the same time :)