This is one of the best article on topic of “ Reversion to the Mean “ … just for reading.
The Realities of Mean Reversion by Jack Forehand, Validea’s Guru Investor Blog
Quote “Mean reversion is one of the most powerful forces in investing. Whether it be the performance of asset classes, the fundamentals of companies, or economic data, almost everything in investing will revert to long-term averages over time.” Unquote
Full article ( here )
Update on regression line for selected world stock markets.
** Although STI is moving above long term mean , but is still much lower than other develop markets, even as compared to HSI.
Another quote from the article “ Investing is a game of probabilities.When something deviates from its long-term averages, the probabilities are that it will eventually revert …