This excerpt from a YouTube video describes expected one-year future returns, comparing observed real-data returns (black line) that oscillate with peaks and troughs due to bubbles, against a blue power-law curve that the speaker says well represents the average return over the years. The speaker emphasizes bubbles create large peaks and deep losses, while the power-law smooths those swings.
And I'm showing here what are the expected returns over one year for the future. So it's this line here that you're seeing here and you see there. The black line is a real data. They are oscillating, you know, with peaks and lows because of the bubbles, you know. Here when we have a bubble, you make, you have a huge big returns right here. Swear you have a bottom, you make, you know, basically you are on a, in a loss. But you can see the blue line, which is a power law. It's a good representation of the average return over the years.
