Not a dig but are you ESL? ( English as a Second Language).
Again I am just trying to understand if you are referring to "Mean Reversion" when you say "Reversion to Mean".
If so, then you need to re-read Markowitz. Or maybe read Markowitz for the first time....Mean Variance Optimisation and Modern Portfolio Theory.....etc.....which incidently are not without their critics.
Back to mean reversion....Are you suggesting that stocks (and CER) which eventually revert to trading around their Mean? Believe me I hope so as I have stated that I am a holder.
However, people critical of Mean Reversion(as am I) believe that when a stock or portfolio of stocks or an index of stocks as the case may be are trading at sustained lows, (like CER/CNP), then these lows form part of the Mean and therefore effect the mean price for the said stock.
Example: CNP trading at $5-$10 per share for a year or two and then at under 20 cents for a year or two (ignoring D2E). If it reverts to it's mean over the long-term as the theory suggests, what's the Mean price. Not even close to $5.
CER Price at posting:
2.5¢ Sentiment: None Disclosure: Held
