Value Investing

ROIC And Reversion To The Mean

ROIC And Reversion To The Mean by CSInvesting

ROIC Mean Reversion

ROIC Mean Reversion

If women ran the world we wouldn’t have wars, just intense negotiations every 28 days. –Robin Williams

Return Measures by Damordaran 2007 (More on ROIC)

REGRESSION TO THE MEAN

This is a key concept to learn along with EV/EBITDA, MCX, and cheapness wins.

REGRESSION TO THE MEAN A good read by an Australian Graham & Dodd-like Investor.

When an investor turns to the research on regression to the mean and investors overreacting to poor company performance/bad news in Richard Thaler research, he or she sees that prices of the winner and loser portfolios take three-to-seven years to revert. See also The New Finance: The Case Against Efficient Markets by Robert A. Haugen and Inefficient Markets by Andrei Schleifer.

RTM vs EMT

Illustration by S of Reversion to the Mean

t is it a Goode value

We next progress to Chapter 5: A Clockwork Market, Mean Reversion and the Wheel of Fortune in Deep Value.

From there we will read chapters 3 and 4 in Quantitative Value.

ROIC Mean Reversion

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