One of “our” many behavioral flaws is best described as Recency – as in we either can’t remember a damn thing and thus we extrapolate the last thing or quarter that pops into our head, or, we just don’t bother to read financial history to understand a proper baseline for the past with which to make estimates for the future.
We culled this from bits and pieces of a quarterly letter from the Horizon Kinetics group and it is worth thinking about what the numbers suggest, both on an absolute and relative basis. It might be worth digging the old trunk of mean reversion out from the attic; if you stuck it there during your last asset allocation meeting.
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