Mean Reverting or Fundamental Change ?

December 08, 2016

image credit to asymmetryobservation.com

Since early December, the stock price for some of the STI counters have increased much as compared to a few months back. Just to recall what I have written in August to explain the concept of “ Linear Regression and Reverting to Mean “ in my blog about “ My Investment Strategy “ ( Click here ).

Of course, there are concerns about China’s economic situation & debt stress in the O&G industry which affecting the bank stocks and also some other concern in counters like GLP / ARA / HKG Land separately.

*** ARA might be a different case as price increase due to propose of privatization.

But seems that just in such a short period of times, does the fundamental really change in these stocks which affecting their underlying business ? or just simply because of “mean reverting “ due to “ mood swing “ from pessimism to optimism?

Up to you to judge! What do you think about the reason for price swing in such short time frame?

But wait !! what about the O&G Sectors ( like Keppel and Sembcorp ) or Telco ( like M1/Star Hub) which still well below their mean ! as what I have explained before, “mean reverting “ is just a “statistical phenomena “and it may not happen in some stocks or never happen in some due to fundamental change of their underlying business ( could be due to digital disruption or something else ).

Cheers and Adios !! I am off on holiday to Swiss alps tours from tomorrow till 20th ….. hope could take some nice photos to share with all my friends and readers here !! :-)