I know there were a couple threads about oil now but I wanted to hear some thoughts about mean reversion. How many of you believe in this and if you do why? Why you think the shift isn't secular?

Can't give you any great insight on oil, but generally I think the term "mean reversion" is greatly overutilized. For certain variables it may make a lot of sense - for example, real exchange rates - over a long-term time horizon. But you see some people apply the idea of mean reversion to virtually everything. In recent years as valuation has become more and more of a hot topic, mean reversion of P/E multiples, corporate profit margins, etc. And as you say, now with oil prices. Overall I think "mean reversion" becomes an easy simplification of the processes that are actually occurring.

Oil - mean reversion? | Wall Street Oasis

mk1275

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