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The Law Of Large Numbers
The law of large numbers is a principle which is used in statistics and probability. This law states that, when the size of a given sample grows, the probability is that its mean will keep getting closer to the average of the entire given population.
However, in the financial context, the law of large numbers means something quite different. In this case it states that a large entity that is rapidly growing will not be able to the same pace in its growth forever. The law of large number is logical in the sense that, say if we assume that a company is growing at rate of about 40% to 60%, it cannot maintain this same growth pace forever because then it would become greater the economy itself which is improbable and impractical.
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