No. of Recommendations: 10
Hail to GMO!
They bring vast amounts of historical data, sophisticated financial models, the smartest of the smart individuals and an unshakable conviction that 6.5% real returns from stock markets and mean reversion of profit margins are a law of physics.
If profit margins dont mean revert, capitalism has failed? Right? Right?
But the US economy has failed to cooperate and profit margins soared.
Investors who followed their forecasts have missed a historic bull market. Of course, it is the economy's fault, not their models.
They mistook historical average as a law of nature and made a religion out of mean reversion.
