Results 1 to 8 of 8

Thread: Mean Reversion

  1. #1
    Veteran Member Ammeo's Avatar

    Mean Reversion !!!

    Its a simple thing meaning prices and returns eventually move back towards the mean or average value over a historical period of time...we are now Gold and Apple coming to what we could call a mean reversion cause if we average the prices of their 5-10 years time then they stand around their mean or somewhat above or below.

    However, Inflation plays a different role in calculation "Mean Reversion" as inflation adjustment will most probably move the average higher than what really seems which could mean Gold or Apple could be slightly undervalued.

    So my question will be is it now a good time to buy any of Gold or Apple or any other asset out of its Mean Reversion? i am personally still bearish on both but think both could provide a good buying opportunity in near future...
    Last edited by Ammeo; 04-25-2013 at 08:12 PM.

  2. #2
    Senior Member Deanfx's Avatar
    For me gold is already a buying opportunity as it eventually already hit the bottom for 2013. For apple I think it is too soon to enter because the overall market valuation for the US stocks as a whole is too overvalued and Apple is included, probably one or two years from now it could be a good bargain but not yet.

  3. #3
    Active Member pipshunter's Avatar
    The prices of every single asset come to their median in all different time frames. But it takes time and also this doesn’t mean that if the prices are far from the mean (some moving average for example) that you could successfully achieve high percentage wins. The important moment is that the MA median price is also moving and if your entry is not correct the crossing between the current price and MA could be far away from where you want. So there are two answers – yes the price always come back to its median, and second it is only a condition to achieve good success rate. It is not enough to be sure that it will work. You need other indicators for confirmation like RSI and MACD.

  4. #4
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by Deanfx View Post
    For me gold is already a buying opportunity as it eventually already hit the bottom for 2013. For apple I think it is too soon to enter because the overall market valuation for the US stocks as a whole is too overvalued and Apple is included, probably one or two years from now it could be a good bargain but not yet.
    I would wait for gold to retest support before jumping on this retracement bandwagon. Gold could have bottomed but this one bounce is not enough to prove it for me.

  5. #5
    Veteran Member Ammeo's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I would wait for gold to retest support before jumping on this retracement bandwagon. Gold could have bottomed but this one bounce is not enough to prove it for me.
    I would fully agree. + Goldman Sachs, BofA, Credit Suisse etc all of them are currently bearish on Gold and predicting for a likely possibility that it may hit a $1200/oz in near future...

  6. #6
    Senior Member LeeChang's Avatar
    Yes, the last week bounce is not enough to prove that the retracement is really in play, but there is such a possibility and we have to not fully ruled it out of our minds. The big banks are playing their game and their predictions couldn't be taken so seriously because they have their own interests. We already had such a discussion on the possible causes of the last gold crash,

  7. #7
    Veteran Member Ammeo's Avatar
    Quote Originally Posted by LeeChang View Post
    Yes, the last week bounce is not enough to prove that the retracement is really in play, but there is such a possibility and we have to not fully ruled it out of our minds. The big banks are playing their game and their predictions couldn't be taken so seriously because they have their own interests. We already had such a discussion on the possible causes of the last gold crash,
    1 thing i really dont want here is Gold making another boring range here in the $1300-$1420 region....

  8. #8
    Senior Member LeeChang's Avatar
    We'll see. It is not impossible. It is very important to see what will be the gold reaction to ECB rate decision and tomorrow to NFP data. If there are some huge upside moves, we could say that the bullish sentiment is again on the table.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
3