The vast majority of the time, this is true. Notice that after the Flash Crash, most prices came back to basically where they started within a few minutes. At

The vast majority of the time, this is true. Notice that after the Flash Crash, most prices came back to basically where they started within a few minutes. At the micro level, the problem is uncertainty. The "true" or "fair" price of a security isn't something you can just calculate: it's uncertain and subject to change when new information is introduced into the system. So theoretically, when the price gets very far from the fair value, market makers should become more and more eager to trade, since they'll make a large profit when the price comes back. But in practice, they never know whether the person on the other side of the trade is just panic-selling and moving the price farther from equilibrium, or if they know something the market maker doesn't and are moving the price closer to a new equilibrium. As the price gets farther from its previous stable value, the probability that the counterparty is informed grows, and eventually no market maker is willing to trade and the market dissolves. This failure mode is related to the "Market for Lemons" problem: asymmetric information causing a market breakdown (http://en.wikipedia.org/wiki/The_Market_for_Lemons http://en.wikipedia.org/wiki/The_Market_for_Lemons).