Systematic forecasts
The essenceĀ of finance is time travel. Saving isĀ about moving resources from the present into the future; financing is about moving resources from the future back into the present. Stock prices reflect cash flows into an infinite future; a long-term interest rate contains within it predictions about a whole series of future short-term interest rates. Markets are constantly predicting future actions, and as those actions move closer in time, the predictions become more solid and precise.