Law of averages playing a mean game, say analysts

A LONG-TIME ally of stockmarket pessimists has gone over to the bullish side. The defector is a shifty character from the world of mathematics known as regression to the mean – or in humbler circles the law of averages.

It lives by the idea that extremes in a series of numbers even out over time.

In the late 1990s when the Standard & Poor’s 500 Index rolled up one 20%-plus annual gain after another, the mean regression crowd warned us stocks were heading for a fall.