MEAN REVERTING

Mean reversion is a strategy practiced by many quantitative hedge funds and day
traders, and can be a self fulfilling prophecy. As a market begins to increase or
decrease abnormally, it attracts investors and traders that decide to go against the
crowd, when enough market participants have joined the contrarian side, the
market moves back toward a more manageable level.

For example, let's assume that on an average day Microsoft moves $1.00 either up
or down. If one day Microsoft's share price increases $7.00 and there was no
significant news or announcement, than a mean revisionist would most likely
believe that the stockwould decrease the next day.