Sentences with phrase «mean reversion assumption»

Situations in which mean reversion does not happen are rare enough as to make a mean reversion assumption a consistent friend to the investor.

Not exact matches

When it over-or under - shoots it accounts for this with the assumption of mean reversion to 15x.

Granted, such a prediction would be entirely pinned on the assumptions of mean reversion (to 6 % growth p / a, and to a CAPE of 15), but it might provide an alternative (or at least discussion worthy) means of testing the predictions of the model.

According to Wikipedia: «In finance, mean reversion is the assumption that a stock's price will tend to move to the average price over time».

Since even hockey - stick supporters now acknowledge that these were high - amplitude events in the Northern Hemisphere, there should be common agreement that mean - reversion is, to put it mildly, an unsafe assumption at best.