Investors who fail to use the best technical tools available or who use irrational methods (such as horoscopes) tend to lose money and must curtail their future investments. If they are investing the money of others, they tend to lose their best customers. The long-run effect is that capital is efficiently channeled to meet future demands, so far as these can possibly be predicted by non-omniscient human beings.

The market is constantly in flux because of changes in people's value scales and in physical circumstances that impact those value scales. Individuals who believe (rightly or wrongly) that they can predict such changes may engage in speculation, the assumption of calculated risks in order to obtain market gains. For example, they may purchase units of a good for later resale, because they believe that they can correctly anticipate a rise in the good's price. (Other forms of speculation can be analyzed in much the same manner as we shall apply here.) When such speculations are successful, the resulting profits are sometimes referred to disparagingly as "windfall profits," with the implication that they are analogous to fruits blown down from a tree by random winds. In other words, these profits are assumed to be arbitrary and accidental.