Be wary of reversion to the mean…& this is why

Aug 21, 2019

Today, a quick look at three slides from our Next Level Wealth live coaching call for members this week.

Firstly, US stock markets are extremely expensive – on a par with where they were on Black Tuesday in 1929 – that doesn’t necessarily mean a crash is imminent, but if you buy at these levels expected returns must be low.

Valuations have never previously been sustained at these levels, so it’s unlikely to be different this time.

Secondly, valuations are almost three standard deviations away from the mean, but due to recency bias market participants expect momentum to continue.

It’s a bit like three 7-foot blokes walking into the room and expecting the next guy to be 10-feet tall.

It’s not going to happen, and mean reversion will eventually take hold.

The third and final slide shows looks at volatility in bear markets, and how ‘bull traps’ can catch out investors on the way down.

By the way, volatility is currently rising!

I discussed this in the short video here

Whenever you’re ready… here are 4 ways we can help you manage your own money and go next level wealth:

  1. Boom or Bust in 2021 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2021 - book in here

  1. Subscribe to our Top 100 Podcast for Investors

 Listen in to our new podcast - The Low Rates High Returns Show - Apple Spotify , SoundCloud

  1. Join our Implementation Program

We’re putting together a new coaching case study group this month for private investors. If you’d like to get the plan, tools and timeless principles for managing your money and creating next level wealth … just send an email to [email protected] with the word “Case Study” and we'll get you more details.

  1. Work with me privately

If you’d like to work directly with me and Stephen Moriarty directly to help you map out and action your next level wealth plan… just send an email to [email protected] with the word “private”… tell me a little about your situation and what you’d like help with, and we’ll get you all the details!