Reversions to the mean, mean market we’re in

15 Sep 2011

It is perfectly natural to get excited by brief exceptions to an established rule. There is something human about it, about seeing oscillations in markets, or central bank speeches, or pay packets, or conversations with your wife of 20 years, as representing a break with the past. But usually things go back to the way they were before, and all our excitement comes to nothing.

Some of my friends in the banking industry got themselves in such a state of mind last week, when Mitsubishi Corp and Kexim opened the dollar bond market, four companies sold offshore renminbi bonds and everything seemed to be on the up. They crossed their fingers and hoped ...

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