Stock market mean reversion makes long-term investing less risky
Mean reversion in stock prices can make stocks less risky for long-term investors like pension funds. This happens because stock prices tend to move back towards their average over time. As a result, investors with a long investment horizon can benefit from this pattern. Additionally, mean reversion affects how investors should allocate their portfolios to maximize returns while minimizing risk. Overall, understanding mean reversion in stock prices can help long-term investors make better investment decisions.