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Episode 209: Popular SWR Delusions And The Madness Of Gurus And Portfolio Reviews As Of September 30, 2022
Risk Parity Radio
The Concept of Reversion to a Mean in Financial Markets
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"It is a fundamental error to assume that the concept of reversion to a mean applies in domains that are not described like that," he says. The idea was popularized in the early to mid 2000s when there was an observation that stock markets reverted to some kind of PE mean. "When people tried to apply that prospectively as in the past 20 years, it hasn't worked at all."
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