Thursday, April 8, 2010
Annualizing home runs and performance
I won't be betting on Albert continuing at this pace. But this is one of the reasons why we don't annualize returns for periods less than a year. If a manger has a fantastic January, to annualize it for a year would suggest that he is able to continue at this pace for the next 11 months (plus violate the rule about past performance not being a predictor of future outcomes).