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Suppose most investors have very short investing horizons and use appropriate (for them) strategies, but investor X has a very long horizon. He would like to trade some advantages (early withdrawal option, low draw-downs, etc) for the long-term return. What are theoretical approaches to model and answer this question? How should it be quantified? What are practical ways to do this?

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Are you asking how someone does long-term investing? – chrisaycock♦ Aug 29 '12 at 13:58
Well, yes, in a sense. I would like to know if there is any model that describes such a trade-off. – Tim Aug 29 '12 at 14:18
So, you're asking about how to model the loss of benefits that occur in short-term trading when an investor chooses a long-term strategy? I'm just seeing clarification since the question's wording may need to be tweaked to be more idiomatic in English. – chrisaycock♦ Aug 29 '12 at 14:33
Yes, sorry, I don't have much formal training in finance. The loss of benefits is pretty clear; the question is about an optimal \ reasonable way to trade short-term quality parameters for long-term quality parameters. – Tim Aug 29 '12 at 14:45
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