Why Long Term Investors Must Understand Mean Reversion

Financial Autonomy

I try my best to avoid financial jargon, but “mean reversion” is one piece of jargon well worth being acquainted with.

The “mean” is just a fancy way of saying the average. The concept of mean reversion then, is that investments and markets tend to want to pull back to their average over time.

This week we’re going to dig into what mean reversion is, and perhaps more importantly, its implications for you as a long term investor.

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