Friday, August 16, 2013

Those who are familiar with a bit of STATISTICS might have heard about a phrase: “Regression back to the mean” quite often. 

Q.What does it mean? 

Ans. It is a statistical phenomenon that indicates that when the results for some specific period or series of events are extremely good or extremely bad, you can expect the results to move closer to normal or the long term averages.

For example, if a cricket team is really hot and wins a lot of matches in succession, it is very likely that it will fewer games in the future; as it regresses back to the mean.

I feel Indian economy after few years of stupendous growth is now REGRESSING BACK TO ITS MEAN....!! 

The principle also applies to the stock/share market. A successful fund manager is likely to cool off  the following year. A wild bull market is likely to end up in a bear market or major correction. When an equity market is very quiet, it is likely to get much more volatility—the calm before the storm. 

So, we need not have to be too worried on this, unless government continues with its faulty policy of PROPPING UP THE INDIAN RUPEE, instead of taking measures to boost growth...........

I feel this should have have happened much earlier, if the government of India's policies would have been more investor friendly.