Investing & Markets

Own assets that compound

Novice

Mastery0%

Novice

Note. Education, not financial advice. Past performance doesn't guarantee future returns. For real money decisions, talk to a SEBI-registered advisor whose incentives don't depend on selling you a product.

Concept 12 of 21

debated

Mean reversion

Hot streaks cool, ice cold runs warm. Extreme numbers usually drift back to average.

Definition

The tendency for extreme returns, valuations, or performance to drift back toward long term averages over time.

Step 1

Predict first

In one or two sentences, what do you think this concept means? Wrong is fine; the small struggle is what makes the answer stick.