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Time is Necessary to Evaluate Performance

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If one of our portfolio managers has one great year, it doesn’t factor at all into how he or she is paid. That could just be a random event. I think it’s actually a stretch to say five years is long enough to be relevant, but I realize not everyone has the same time frames. Clients do have finite patience, so I consider five years a decent compromise between what clients will give you and what we think is the minimum necessary to have any statistical significance.
Source: http://www.valueinvestorinsight.com/