The false illusion of converging returns over time

Years ago, a well-known American investment company conducted a study which attempted to explain how returns of long-term financial investments, over the years, converge towards the mean. The period of time examined was 1972-2001, thirty years spanning across the best moment to invest in 1972 vs. investing in the worst moment of 1972, at the beginning of the year vs at the end of the year. According to the study, timing led to negligible differences in average annual yield (if I remember correctly, yields were between 15.1% and 15.7%, different times for the financial markets). Outside of the fact that a difference of 0.6% per year for thirty years is a lot of money, the thing that made me most furious, and you’d think they’d have done the study with at least a crumb of intellectual honesty, was that in 1974, two years after the starting period of review, the

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