The crowd is most often right — except at the extremes. Mean reversion is the disciplined exploitation of those extremes, grounded not in optimism but in arithmetic.
The core idea
When an asset moves significantly away from its average or intrinsic value, the probability of a corrective move increases. We are not predicting the exact turning point; we are positioning for the statistical tendency of prices to return toward fair value over time.
The hardest part of mean reversion is not the model. It is the patience to wait for genuine mispricing rather than chasing noise.
What we screen for
- Distance from a long-horizon fair-value anchor
- Whether the deviation is sentiment-driven or structural
- The cost and time of carrying the position to resolution
Done well, mean reversion is patient, unglamorous, and quietly effective. That is precisely why it works.