Mean Reverting

“The downside risk of investing when earnings and valuations are far above historical averages should not be underestimated. Peak earnings go hand-inhand with peak valuations. When earnings revert back to mean (and below), the valuation will also collapse.”

Mean Reverting Profits

More on valuation: https://brokenmarkets.wordpress.com/2013/08/19/valuation-metrics/ https://brokenmarkets.wordpress.com/2013/08/16/valuation-3/ https://brokenmarkets.wordpress.com/2013/08/20/valuation-5/

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