Month: February 2014

One of the few things we do know is that  over three to five years, pretty much everything has shown some systematic, if certainly not dramatic, tendency to mean revert (especially when one accounts for and avoids the powerful effect  of momentum at shorter horizons). This means that when we rely on three- to five-year periods to make decisions—favoring things that have done well over this time period and shunning things that have done poorly (note the past tense)—we aren’t just using data meaninglessly; rather, we are using data backwards. Essentially, with a disciplined approach, value and momentum are both good long-term strategies, but you don’t want to be a momentum investor at a value time horizon.-from CapitalSpectator