flyoverman

Outlook For Select iShares ETFs

I agree that in many, probably most, market segments reversion to the mean is logical and probably demonstratable. One only has to look at the charts to see the up down movements of prices that seem to track some kind of mean, be it a constant mean or trending mean.

However, there are "megatrends" that impact all but those with the shortest horizons. For instance, we can discuss the mean for the Software sector over an intermediate horizon, but it really didn't exist to any great extent 35-40 years ago. The transportation sector (you know the buggy whip market story) as undergone a tremendous upheaval. May be the critical point isn't whether or not there is a "reversion to a mean" but what is the "mean" or what is the future "mean." You could probably substitute the word "trend." Ahhh... that is the rub. Don't get to carried away with the "mean." Some companies and some sectors actually do die. Some actually do grow into new somewhat permanent plateaus or a new levels of "mean." Predicting the future is still a rough business.