Robert Shiller thinks that movements in financial markets are very much tied to psychology.
What the market thinks a stock is worth today can be worth twice as much three months later with no actual change in anything to do with the business. Shiller believes the human brain is wired to be interested in human interest stories rather than cold hard data.
When a stock price starts going up, it attracts attention to stories of interest that might explain it.
Here he is explaining how bubbles form:
