In what way do long-term trends regress to a mean? The price of gold has risen over the past decade, although it has demonstrated short-term volatility during that period. How would you, as an investor, determine what the mean price should be and how the market price will regress toward it?
This is not investement advice and I have no idea on gold prices ... But it's a good question and I gold is clearly both heading upwards and subject to wild swings. My guess is that if you pull back from the day to day, you would see an average growth over the long term of close to 9%. So, In this case, pregression to the mean doesn’t mean to 0% it means don’t look at one day’s jump and assume is will now slow down later.
In what way do long-term trends regress to a mean? The price of gold has risen over the past decade, although it has demonstrated short-term volatility during that period. How would you, as an investor, determine what the mean price should be and how the market price will regress toward it?
This is not investement advice and I have no idea on gold prices ... But it's a good question and I gold is clearly both heading upwards and subject to wild swings. My guess is that if you pull back from the day to day, you would see an average growth over the long term of close to 9%. So, In this case, pregression to the mean doesn’t mean to 0% it means don’t look at one day’s jump and assume is will now slow down later.