Melanie has observed that stocks that have earned high returns over the past year tend to earn low returns over the next year.She has also observed that stocks that earned low returns over the past year tended to earn high returns over the next year.This is an example of:

Question

Quizplus · Accepted Answer

Melanie's observations describe a long-term reversal pattern, where past performance inversely predicts future returns. This means that stocks that performed well in the past tend to perform poorly in the future, and vice versa, over long periods.

Melanie Has Observed That Stocks That Have Earned High Returns