Stock Market Crashes

Imagine a neighbourhood where everyone is flipping houses. One person buys a house, paints the fence, and sells it for twenty percent more than they paid. Their neighbour sees this, buys two houses, does nothing to them, and sells both for a profit because prices are climbing. A third neighbour mortgages everything they own to buy five houses because how could you possibly lose money when every house on the street sells for more than it did last month. A feedback loop forms. Prices rise because people are buying, and people are buying because prices are rising. At the peak, nobody is buying houses to live in. They are buying because they believe someone else will pay more next week. This is the greater fool theory, and it works beautifully right up until the moment it does not. One day a house sits unsold for a week. Then two weeks.