Reversal to the mean
Most asset classes have a cycle of growth and decline, and there is an inevitable reversal to the mean, which is why buying last year winner frequently means buying at the point of maximum disadvantage.
This one is not written up yet
The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.
Written up from the same chapter
Where this is taught
Free preparation for NISM Series X-B← All terms