In reading 7, there is the sentence: Emotional biases and an irrational belief in mean reversion encourage market trending patterns.
I don’t understand how a belief in mean reversion encourage trending patterns. To me a belief in mean reversion encourage mean reverting patterns.
Mean-reverting and trending aren’t necessarily mutually exclusive.
3.2, 1.6, 0.8, 0.4, 0.2, 0.1, 0.05, . . . is trending and, assuming that the mean is zero, mean-reverting.
I’d need to read the sentence in context to see if there’s more to it.
It says irrational belief in mean reversion.
It doesn’t say what the rational belief is.