Swing
While I was attempting to decipher James Montier's, "In Defence of Old Ways", (not a knock on Montier, just a comment on my stupidity) it struck me - there's usually two ways brick pushers respond to figures showing Oprah's favourite country is in a real estate bubble. Either they acknowledge them, then fiddle them, to suit their own ends - hello Commonwealth Bank. Or they dismiss them entirely, as being outdated methods of measurement, to suit their own ends - hello ANZ. So, it's either dubious fudging, or we're in a new paradigm. And if we're in a new paradigm, are we really in a new paradigm? As Montier points out: It is also worth noting that in order for mean-reversion-based strategies to work, it is not required that the mean be realized for long periods of time, but that markets continue to behave as they always have, swinging pendulum like between the depths of despair and irrational exuberance, or, from risk-on to risk-off. Kind of like this ...