Mean Reversion

Stock prices drift around a long-run growth trend, and when they get far above or below that trend, future returns tend to reverse toward it. This isn't a crash timer — markets can stay stretched for years — but it frames whether the next 5 to 10 years are more likely to be a decent or lean stretch for equities. When the market is well above trend, it's a signal to dial down return expectations and hold more dry powder; well below trend, it's historically been a good entry window for long-horizon capital.