Here's something most finance textbooks won't tell you: the traditional wisdom says money flowing into stocks shouldn't move prices much. The theory assumes if prices rise, demand naturally tapers off, creating a natural equilibrium.

But a new working paper flips this on its head. Researchers found that stock market demand is actually quite inelastic—meaning even as share prices climb, people don't reduce their buying pressure proportionally. Demand stays stubbornly high regardless of price movements.

This has serious implications. If buyers aren't sensitive to price rises, then capital inflows hit the market like a sledgehammer, pushing valuations up faster and harder than traditional models predict. It explains why certain rallies feel unstoppable: the demand curve doesn't work the way textbooks say it should.

This principle actually mirrors dynamics we see in crypto markets too—when conviction is high, price elasticity collapses and money pours in with little regard to valuations.