While oil prices have been volatile in 2014, stock prices haven’t. The U.S. stock market has continued the gradual upward move it began in 2009, while the VIX volatility index peaked very briefly in October at 31, far below the level of almost 90 touched in 2008. Politics has been turbulent, and the oil price decline has been significant by any standards, but equity investors have enjoyed a tranquil and prosperous year, the latest of several, in which price changes have been quite gradual but generally upward and market and economic changes have been slow. For a number of reasons, 2015 promises to be very different, and to see the return of “fast markets” in which trading speeds up, prices jump about all over the place and volatility spikes. For retail investors, it won’t be an enjoyable experience.

“Fast markets” is a term used by the NYSE and other markets to define market situations when price discovery is impossible because trading is too chaotic. For example NASDAQ defines it as “excessively rapid trading in a specific security that causes a delay in the electronic updating of its last sale and market conditions, particularly in options.” You’d think “fast markets” would become impossible with electronic reporting, but as we saw during the 2010 “flash crash” electronic systems can themselves generate a volume of orders that overwhelms the normal market-making mechanisms and causes prices to leap about uncontrollably.

The term “fast markets” is relatively new, I believe dating back only to the 1990s, but the reality is a century old. During the “Black Tuesday” trading of October 29, 1929, when a then-record 16 million shares changed hands on the New York Stock Exchange, the electro-mechanical ticker tape ran fully six hours late – it was thus impossible for any investor not present on the floor of the Exchange to know at what prices shares were being dealt. The same phenomenon occurred on October 19-20, 1987, even with the much faster electronic reporting available by that time; although the delay never stretched further than an hour and a half, it was sufficient to cause panic among market-makers that sent S&P 500 futures prices well on the way towards zero.

The “fast markets” phenomenon is inexplicable under conventional market theories such as the Efficient Market Hypothesis, which assume that markets are Gaussian and that one day’s trading is more or less like any other, except possibly for differences in “volatility,” that magic number that explains all trading anomalies. However while theoretically impossible under modern financial theory, “fast markets” occur with some frequency, and the trading in those markets is different not just in volatility but in nature from trading in calmer periods. The best analogy is to the flow of water through a pipe, which as fluid dynamicists are aware can change in nature with additional velocity, becoming turbulent instead of streamlined and obeying a very different set of dynamic equations.

In “fast markets” periods trading is mathematically chaotic, price discovery is not well behaved, price leap by arbitrarily large amounts and while trading volumes are exceptionally large in general, trading can cease altogether for periods of time during which there is no price at which buyers and sellers can be matched.

During the six years since the 2008 financial crisis, “fast markets” trading periods have been infrequent, occurring only when computer generated algorithms have destabilized the market of their own accord, with no rationally assessable news event or valuation change behind them. In 2015, this is likely to change, and it is worth setting out why this change will probably occur this year.

First and most important, the cheap money policies pursued by Fed chairmen Ben Bernanke and Janet Yellen since 2008 (and by Alan Greenspan since 1995) have vastly increased the leverage in the U.S. economic system, at the retail, corporate, financial and government levels. Consequently they have made the system much more unstable. In the early 1990s a sustained period of tight money in 1994 (which with a top interest rate of 6% and a duration of only a year was mild indeed compared to Paul Volcker’s tightening in 1979-82) produced severe pain only in Wall Street. Today however such an equivalent period would, by reducing asset values throughout the system, cause a “house of cards” collapse of the financial markets, in which debts became suddenly worthless and valuations which had appeared soundly based were suddenly perceived as built on sand.

Optimists will opine with considerable justification that no power of heaven or earth is going to make Janet Yellen increase interest rates except by the tiniest amounts, so a collapse of asset values that extended across the entire economy would be very unlikely. We may descend into hyperinflation, and we are undoubtedly year by year decapitalizing the U.S. economy, making it less productive and more unstable, but a full scale credit crunch must be regarded as a low probability “black swan” event.

However higher interest rates are not at this stage necessary to produce “fast markets” The decline in oil prices from $100 a barrel to just above $50 has weakened asset values throughout the U.S. shale, tar sands and deep sea drilling sectors. This in turn will cause an explosion of losses and negative cash flow in many corporations, some of them surprisingly far from the sectors that are apparently worst affected.

You have to understand that the steady rise in stock prices over the last six years has been fueled by earnings at a historically exceptional level in terms of GDP, with prices further boosted by massive stock buybacks — $55 billion in 2014 alone in Apple (Nasdaq:AAPL). Unlike in 1999, stock prices are not grossly inflated in relation to earnings, but earnings themselves are inflated and leverage is boosted by the artificial stock repurchases, which certainly do not increase the stability and value of the underlying over-leveraged companies and in many cases reduce it.

Hence anything that causes a dip in corporate earnings is likely to have a disproportionately severe effect on the market, as valuation metrics that had appeared reasonable in terms of inflated earnings become highly unreasonable as earnings revert to a historically more normal level. Again, the most likely catalyst for such a reversion is a rise in interest rates, but the current tsunami in the oil sector may well be sufficient to affect a sufficient proportion of U.S. corporations as to topple the unsteady edifice of current valuation metrics.

Such a reversal looks increasingly likely. The 5% increase in third quarter GDP, fueled by increased consumer spending, is an example of how, as this column suggested a few weeks ago, the benefits of lower oil prices are coming through before the costs. However in 2015 the costs will begin to appear and profitability will be affected. Apple, for example, is seeing a steady decline in margins, from 44% in the year to September 2012 to 38% in the latest quarter. This reflects the tapering off, as Chinese wages rise, of the massive benefits from globalization that have propped up the profits of U.S. multinationals; it can be expected to accelerate in 2015. At some point, even the doziest investors will notice.

However, beyond oil and corporate profits generally, the most likely catalyst of “fast market” trading in 2015 is a fall back to earth in the tech sector. Too many companies in that sector have decided they are above the vulgar necessity of actually earning a profit. This is not just a short-term phenomenon; Amazon has a market capitalization of $140 billion without ever having produced more than a marginal profit (its current trailing P/E is infinite, its forward P/E a relatively conservative 343 times earnings) while smaller companies such as Angie’s List have managed to exist for almost two decades without ever making a profit at all.

At some point investors will stop buying dreams and start insisting on reality, and with the turbulence to be expected elsewhere it’s likely that their belated realization – which may look rather like William Holman Hunt’s 1853 masterpiece “The Awakening Conscience” — will take place in 2015. At that point, investors, realizing like Holman Hunt’s mistress the true horror of their position, will see that without profits, there is nothing to support sky-high valuations, and market “volatility” will reappear with a vengeance.

Lengthy periods of prosperity can continue for a very long time if they are intrinsically stable. But the current upswing, in which stock market valuations break new records while the economy moves ahead only sluggishly, is highly artificial, born of monetary and to a lesser extent fiscal policies of record-breaking profligacy. In 2015, reality is likely to dawn on investors, triggered by huge losses in the oil sector and/or the potential for huge losses in tech, and the market will react accordingly. Fast markets, in which price discovery becomes impossible and prices jump by arbitrarily large amounts, will be a symptom of the new reality.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)