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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (62688)	10/11/2019 9:58:46 AM
From: E_K_S	Respond to of 78470

My take on "reversion-to-the-mean" is PE gets so low (compared to 10 year history), that you buy the value and PE then eventually moves back to it's mean. Looking at the chart, it is exactly as you describe. Lots of variables moving in the 'E' Good Investing

To: Ditchdigger who wrote (62688)	10/11/2019 10:55:46 AM
From: Paul Senior	2 Recommendations Recommended By E_K_S sjemmeri Read Replies (1) \| Respond to of 78470

It's not just a substitute term for technical analysis. Looking at a stock chart, you might see fluctuating stock prices and determine from some low price point and volume that the stock might, or is, reverting to a higher price, and thus is at a buy point. Technical analysis. In my usage, reversion-to-mean, is looking at a chart or table of historical book values, and/or price/sales rations, and/or p/e's, or other metrics. Then comparing that to current metrics, and making an assessment of the company's current situation, and guestimating whether the situation for the company might improve to where the company will again be viewed by the metrics it's had in the past.