We are looking for companies with earnings that are growing smoothly and strongly. These features help us to make earnings forecasts with more reliability.
However, even if earnings grow as we forecast, there is still no certainty in the short term that the market will recognize this, by paying a correspondingly higher price for the stock. As we move further out in time, the effect of the market overpaying or underpaying for a particular stock becomes less relevant. For this reason, we want to set the investment period large enough so that effect of the irrational moods of the market is minimized.
In the opposite direction, the longer we set the investment period, the less certain we can be of our earnings forecasts. A reasonable length of time for the investment period is 5 years. However, you can set it to any desired length by going to the Rate Settings box under File in the main screen. Changing it to less than 5 years is not recommended.
You can also see the effect of different numbers of years by changing the settings within the Scenario Analysis.
