# Regression to the Mean

Regression to the mean is the phenomenon where an extreme observation is likely to be followed by one that is more average on further measurements. This is a significant consideration in the design of experiments.

This is also an important mental model to keep when making estimations and forecasts. For example, the best performing mutual fund in the past several years is more likely to see a performance decline, than improve in the next several years.

Only those that can consistently outperform the mean in some metric should be considered “better” than the rest.