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Behavioural Finance with Simon Russell

Misunderstandings about mean reversion with Julian Morrison

01 Jun 2020

Description

We live in extreme times! But will things revert to 'normal'? In this behavioural finance conversation with Julian Morrison from Allan Gray we speak about the frequently mentioned but often misunderstood concept of mean reversion. We discus when it typically works (think energy stocks & profit margins) and when it doesn't (think Woolworths & gross sales). We discuss the underlying causal and statistical mechanisms, how you can use mean version to diagnose a problem with capitalism, why even sophisticated investors don't think about mean reversion enough, and why tall parents might appear to under-feed their children. This 13 minute recording is relevant for investors and advisers.

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