Fade period

The stretch of a forecast during which excess returns decline toward the cost of capital, reflecting the effect of competition.

A business earning 30% on capital against a 12% cost, fading linearly over ten years, gets to 12% by the end.

Building an explicit fade is what separates a serious long-horizon model from an optimistic one. If you assume a 30% return persists forever, you're assuming a moat no competitor ever breaches, and the empirical work on return persistence says that's rare enough to need justifying by name.

The fade rate itself becomes the investment thesis. If you believe the returns hold for fifteen years instead of five, say why, in terms of the specific barrier.

Competition is the base rate. Durability is the claim.

Fade is the default assumption. Persistence is the argument.