One of the tried and true tenets of successful investing is taking a long-term perspective.

Warren Buffet says that his favorite holding period is forever.  He doesn’t always hang on that long, but still recommends that you should ‘only buy something that you’d be perfectly happy to hold if the market shut down for 10-years.’

Regarded academic Jeremy Siegel wrote the buy and hold bible, titled ‘Stock for the long run,’ where he argued that stocks are safer than bonds if you have a 30-year time horizon.

Legendary investor Peter Lynch said that ‘your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed.’

So, we’re all long-term investors, right?  Well, I was reading a report from State Street that interviewed 400 of the largest institutional investors, and was taken aback by some of the responses.

When asked how long is underperformance tolerated before seeking a replacement, 40 percent of the respondents said one year.  One year! Forty-nine percent said two years and 11 percent said three years.

That means that 100 percent of the most sophisticated investors out there from pensions and foundations to endowments and sovereign wealth funds won’t stick with a manager for more than three years without seeking a replacement.

State Street asked the same question regarding smart beta strategies, or factor investing (momentum, value, quality, etc.) and the response was even more dramatic: 80 percent won’t tolerate more than one-year of underperformance.  Nineteen percent will tolerate two years and only one percent will tolerate three years.

I was astounded by the short-term perspective of these professional investors.  What about discipline?  Or patience?

One of my favorite stories is about a mutual fund that we use that underperformed the S&P 500 for nine long years.   Nine!  This fund has done fabulously over the long-run, but you had to be patient and endure the bad times to enjoy the fruits of the good times.  The full story is here, if you’ve got a minute.

I realize that nine years is an awfully long time to wait and, thankfully, that dry spell was drier than most.

So what’s a reasonable time frame?  Well, unlike the institutional investors who can barely wait three years, I think that three years is the minimum amount of time that you should dedicate to a strategy.

Small cap, value and momentum all go through bad times – in fact, until the election, value was going through its second worst period in history behind the tech bubble.  Small caps were suffering too, but turned around after the election as well.

We’ll see if these trends continue (I have no reason to think that they won’t, but I can never promise much about the future), but you deserve some congratulations for sticking with these strategies while they under-performed.

Those ‘clever’ institutional players would have been long gone and missed the recent upside.

This report shows that you’ve got an advantage over the big boys: the ability to stick with a strategy through thick and thin, which can be tough in the short run, but will hopefully pay off in the long run.