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"> modeling a particular market force that has been difficult to capture in previous models. Empirical evidence shows that, when a stock return is fluctuating i
by drallison 9y ago
"> modeling a particular market force that has been difficult to capture in previous models. Empirical evidence shows that, when a stock return is fluctuating in the short term, there exists a market force that draws the fluctuating stock return back to its long-run equilibrium. This force is related to the concept of mean reversion, which is the tendency of a stock to return to its average price."
Talk of "market forces" and the like fall into the quantum voodoo school of economics, IMHO.
- Chris2048 9y agowait, is that right: > the tendency of a stock to return to its average price return to its historical average? As applied to all stocks, or certain, particular, mean-reverting stocks?