In this video we make the contributions and withdrawal amounts from our savings variable, both making them random, but also dependent on the markets. While it is neat and easy to say we contribute a fixed amount every year in reality life is rarely that predictable. We need to understand how this lack of predictability will impact our financial plans.
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More