Tag: Mean-Reversion

Financial Gravity

Financial Gravity

After the apple hit Sir Isaac Newton’s noggin, he, and subsequently the rest of the world, understood gravity – what goes up must come down. There is also a form of gravity in the financial markets, which often goes by […]

The Limits Of Mean Reversion

The Limits Of Mean Reversion

In his latest quarterly letter, GMO’s always interesting Jeremy Grantham lamented the refusal of U.S. equity valuations, and the stubbornly high profit margins that have sustained them, to revert to the long-term average.  Grantham writes: “We value investors have bored […]

Indexing Bias

Indexing Bias

Behavioral Finance combines behavioral and cognitive psychology theory with conventional economics and finance. Essentially it attempts to account or add the “human” element into understanding how the markets behave. While still a relative new area, it has garnered a great […]