We first review empirical evidence that asset prices have had episodes of
large fluctuations and been inefficient for at least 200 years. We briefly
review recent theoretical results as well as the neurological basis of trend
following and finally argue that these asset price properties can be attributed
to two fundamental mechanisms that have not changed for many centuries: an
innate preference for trend following and the collective tendency to exploit as
much as possible detectable price arbitrage, which leads to destabilizing
feedback loops.Comment: 16 pages, 4 figure
