Unfortunately I have forgotten the formula for determining the future value of an invest from my intermediate accounting classes. I would like to provide some incentive for my grand daughter by showing her what a $100.00 initial investment with $25.00 monthly additions would be worth in 50 years earning 5% per year. Anyone familiar with the formula for making this calculation and if so, could you please provide me the results? Thank you to all for your suggestions on reading material.

FYI: Riding just one growth stock to big gains is always a challenge. But Will Danoff does it so often that Fidelity Contrafund has become a $107 billion behemoth that's returned an average annual 12.94% during his more than 27 years at the helm.
Regards,
Ted
http://www.investors.com/etfs-and-funds/mutual-funds/fidelitys-will-danoff-talks-about-the-super-bowl-and-super-stocks/

Hi Catch22,
Extrapolating short term market data for a much longer timeframe is dangerously serious business. It can certainly promote an unrealistic outlook and a deeply flawed projection.
I know you were kidding in your post, but it did surface an interesting question. If equities deliver positive returns in both January and February, what are the likely odds and returns for the entire year?
I sure don't have an answer, but Sam Stovall has appently addressed this same question. I don't have a primary source reference, but here is what a secondary source reported:
"(The) S&P jumped 3.7 percent in February after rising 1.8 percent in January. In the 27 years since 1945 that the S&P rose in both January and February, the S&P recorded a positive full year return 27 out of 27 times, averaging a total return of 24 percent,"
I lifted this summary paragraph from the following article:
http://www.cnbc.com/2017/03/01/wall-streets-super-charged-bull-faces-its-own-march-madness.html
I haven't checked its accuracy. Apparently, so said Stovall. I was greatly surprised. So your fun projection might just be slightly overly optimistic.
I was also surprised that the S&P 500 generated positive January and February outcomes 27 times since 1945. Wow! That's 38 % of the time.
History is an important factor when making investment decisions. However, it is an imperfect measure; change happens. I know you recognize its shortcomings and are acting to protect your portfolio.
Best Wishes
EDIT: Here is a Limk to an article that presents the basic data in a chart format:
http://www.marketwatch.com/story/this-bullish-signal-has-never-been-wrong-and-its-about-to-flash-for-2017-2017-02-22
Sam Stovall does excellent historical market research. Enjoy and profit, but note that although all 27 years finished in positive territory, two of those years staggered at the end with only slightly positive outcomes.

Best: RPHYX/RPHIX - I annually funded it for 2 years worth of monthly withdrawals as our retirement 'paycheck'.
Mixed Bag: RSIVX/RSIIX - On the taxable side, I did a little tax loss harvesting and then reinvested once Mr Sherman got the train back on the track. On the IRA side, it's been an interesting ride, but in the long run, it has been an overall gainer. ( I tend to be a buy & hold traditionalist )
Worst: The RiverPark Focused Value Fund RFVIX/RFVFX
Speaking of which: Whatever happened to the occasional Conference Call invitations? I haven't seen any for awhile...

https://www.yardeni.com/Pub/peacockfeval.pdf
There is a lot there. If you can make anything of it.

Schiller's P/E is adjusted. Still interesting.

From the original post's link. Even based on the more common price-earnings ratio, the market looks rich. The S&P 500's P/E based on earnings of the last 12 months is 18.9, the highest in more than 12 years, according to FactSet.

Keep in mind that inflation is still very low, and that can support a higher P/E ratio. Just because equity markets are hitting a new high, doesn't mean that we are due for a crash. I'm not terribly concerned about a correction, which I would view as a buying opportunity.
Anyone have a link to projected earnings? That is part of the equation. I'd like to take a look. But those projections have to be tempered by the fact that they are typically short term, and analysts have a ton of conflicts of interest. Not to mention that they are highly overpaid and terribly underskilled.

For what interest it holds, the manager - who came onboard in 2005 - seems entirely sympathetic to your complaints about the funds though, given that his dad founded the firm he needs to be a bit circumspect.
His argument, I think, is that the funds were once 100% pedal to the metal: buy great, growing companies and hold them, volatility be damned. The results were great, until they weren't.
His addition to the discipline seems to be the macro overlay: start with the question of whether you should be seeking to embrace or withdraw from risk first, then look at the best options within that strategic vision.
If you look at 2000-02, before his time, the fund lost 88% - 5000 basis points more than its peers and took 14 years to record.
Compared that to 2007-09, when he was in charge. The fund lost 54%, 400 basis points more than its peers but had fully recovered by April 2010.
During the current upcycle, it's maximum drawdown was 20.8%, 100 basis points more than its peers and it bounced back far more quickly than they did.
To be clear: the fund is more aggressive than I am, so I'm not ever likely to add it to my personal holdings. That having been said, (1) it's not his father's Pin Oak and (2) it's an interesting answer to the "where can I get market-beating returns?" question. It feels like investors put managers in an incredible bind: they flee from active funds because they don't beat the ETFs and flee from active funds because they do, apparently in the belief that ETFs offer ...
Hmmmm.
In any case, I did approach Pin Oak with consider caution and skepticism. The combination of the numbers and the story convinced me that folks who dislike my normal conservatism (Intrepid Endurance at 70% cash, RiverPark Short-Term at 3% and FPA Crescent at 45% bonds and cash) would like the opportunity to consider the alternative.
As ever,
David

I don't have the wiz-bang sure-fire indicators you all have, but I read occassionally, and have come around near to where OJ sits in my market view. Just another in a long string of indicators ... But when the folks at TRP start throwing around terms like "pre-1929" (valuations ) I take note. Caveat: Even very good indicators can be years ahead (early), so smart people often end up looking foolish.

Hi @Old_Joe and others,
I am seeing an unprecedented low reading on my market barometer if I remove the floor on all the feeds with the exception being earnings. The earnings feed is keeping the barometer reading propped up. The barometer reading with the floors in place is 130 and when the floor is remove letting the readings float then the barometer reading drops to 112. This is the impact the improvement in reported year-over-year earnings and forward estimates are having on stock market prices. It seems investors are currently willing to pay dearly now for earnings thus extending the markets to richly priced levels by some metrics. In addition, the carry trade is drawing foreign money to the States plus perhaps some retail investors are now selling bonds and buying stocks.
Currently, I am overweight equities by 10% over what my market barometer and equity weighting matrix are calling for. In most past years I have trimmed based upon my matrix.
Is it time to cut and run? Perhaps. But, at this time, I going to stay with the trend until I see the money flow and the relative strength indicators, which make up my technical score feed, start to give way.
I wish all ... "Good Investing."

On three or four occasions over the past fifteen years or so I've posted a similar warning to all MFO readers. I keep track of all of our investments on a spreadsheet, and very infrequently it becomes necessary to adjust the range of some of the charts.
Increasing the range on the downside has never resulted in the market going up. However, increasing any of the parameters to the upside has always been followed shortly thereafter by a significant market "correction", sometimes referred to as a "crash".
Be advised that I have just made such an adjustment. GOOD LUCK TO ALL OF US!
Further note: The caps above were unintentional- the investment gods must have made me accidentally hit the "caps" key. Surely a sign from above!

The muslim funds of Amara have a good record so het. you nevr know

True dat - see AMAGX and AMANX. The Islamic principles that differentiate 'em for the most part are restrictions on lending/borrowing, high debt loads, speculation (as they define it, including lots of turnover), and alcohol/tobacco/pork.
The main practical effect of those is that they're (almost always? always?) weighted zero in financials and pretty skimpy or zero in other sectors/subsectors, and end up with pretty much a very low turnover "quality" portfolio invested in a limited number of sectors.
I owned AMAGX some years ago, and may at some point again; it's attractive beyond its religious "base."

@davidmoran: I'm giving you up for Lent !!!
Regards,
ted
@Ted- speaking of lent, when are you going to pay back the $100 that I lent you ten years ago? :)

Merriman is soon to release a "motif like" all in one fund to replicate his 13 small slice portfolio which allocates among all sectors stocks and bonds domestic and international. His work is based on DFA research. According to him, this portfolio outperformed S&P500 substantially over the last 45 years.
Vanguard's position (which I respect) on Int'l allocation as follows:
https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio

While I too would like to the the OEF TFs reduced, Fidelity already makes it possible to increase positions in TF funds for $5, and to sell positions at no cost.
That likely makes it the least expensive brokerage for OEF round trips. (I am disregarding WellsTrade here, as (a) it is Wells Fargo, and (b) its no fee schedule is not available for new accounts.)
In addition, Fidelity did lower its fee by 1/3 about four years ago, a price drop that Schwab declined to match.
http://www.mutualfundobserver.com/discuss/discussion/8170/fidelity-lowers-its-transaction-fee-for-tf-funds

Faber himself likes to say "at some point in their life everyone will be right". His time hasn't come yet, but it will.
And no, people will not remember all the years he was wrong.
FWIW, I always take 20% profit on 20% of my position every year and if the fund keeps going up, I keep doing it. Of course I pay attention to distributions and if forthcoming i don't do it since I don't reinvest distributions. This simple tactic has really helped me stay calm and focused. I have never and will never match the index returns, but I think that's a good thing when index goes down.

It's not just an effective strategy for managing volatility, it can significantly beat the market in cases of significant downturns, although it would tend to trail in cases where an investor gets whipsawed. From late 2000 until the beginning of 2013 the S&P went nowhere (excluding dividends, which isn't unimportant, but both the 10 month and 12 month moving average systems made enough gains that someone could get whipsawed a lot and still be ahead. The real question is whether you fear a big downturn or fear being whipsawed more in the future. Considering the volatility benefits it would seem like a decent chance of significantly improving risk adjusted returns and possibly absolute returns, although the internet bubble and the credit crisis were a big help in the last 15+ years.

"They got that way they say by shoveling every spare penny maxing out their retirement accounts during their working years in S&P index funds."
Unfortunately we were much too early for index funds, but we did the shoveling away into American Funds and American Century predominately large cap and balanced funds. An S&P 500 index fund, had such a thing existed, would have worked even better.

I agree with you. At least since the market bottom in early 2009 I have seen scant evidence MFOers have beaten a buy and hold in the Vanguard S&P 500 fund. Or for that matter come remotely close. Lots of international and emerging market investing and love for cash rich funds as well as alternative funds. The latter out of fears of another 2008.
Edit; Yes, I know it has been a relentless move up the past 8 years and 8 years may not be a long enough period to make any kind of judgement. But I know countless passive investors who are now set for life thanks to those 8 years. And isn't that what it is all about??

I'm not disagreeing with your basic conclusions, but I've never really agreed with using the S&P 500 as a benchmark of an investor's portfolio. While I doubt everyone will agree on what would be a better benchmark, I think that a Balance Composite Index would be a closer measurement. Some people consider cash to be part of the portfolio. That would include a rainy day fund, as well as holding cash as an alternative asset. While I'm sure that there are people who are 98% in equity, I doubt the number of investors who do is very high, unless you own part of the family business.

I can't necessarily disagree with you regarding the benchmark. I guess I am just biased from meeting so many retired multi- millionaires in my various hiking groups. They got that way they say by shoveling every spare penny maxing out their retirement accounts during their working years in S&P index funds. And in some of the younger groups I hike with they seem to be doing the same thing and far ahead of where I ever was in my younger days. Which reminds me of an article I saved from the WSJ 7/7/97 titled Waking Up Rich. It detailed how suddenly many investors are finding themselves millionaires from their employee sponsored retirement accounts by being in funds that mimic the S&P.

FYI: Conditions are ripe this year for mutual fund managers to outperform the market after years of lagging behind it. However, even a near-perfect environment may not be enough for them.
The good news for the $13.9 trillion mutual fund industry is that 2017 has started off fairly well. About half the large-cap funds have outperformed the market as measured against the Russell 1000 so far, according to a Goldman Sachs analysis. That compares with just a paltry 19 percent beat rate in 2016.
Regards,
Ted
http://www.cnbc.com/2017/02/28/mutual-funds-seen-having-lousy-2017.html

Gross was a blackjack dealer (and a very good one) in his earlier years. Not so well known, Rukeyser often frequented the tables in Vegas and by accounts really enjoyed it. RIP Lou.

Hmmm ... I've been writing about individual funds, between FA and here, for just about 11 years. There are two profiles, both from FundAlarm days, the thought of which still makes me queasy. By worst the worst were the Utopia Funds, launched by a small advisor in Michigan. They had go-anywhere portfolios with remarkably low minimum initial investments and reasonable expenses. Five funds, ranked from "Income" to "Aggressive." They were based on a really successful set of separate accounts that thrived because they were small; they picked up bits and pieces of "orphan" investments that larger advisors found too small to be worth the effort. Those ranged from regional micro-cap stocks to called bonds. In practice, the funds started okay then sank into the average-to-bad range. Not "awful," but clearly "bad" when judged by their ability to maintain the targeted risk level. Then, without warning, they closed and liquidated. When I tried to contact them to ask about the decision, I got silence in return.
That was useful to me and, arguably, profitable to you because I stewed a lot about what contributed to the mistake. Part of the lack of a mutual fund record, as opposed to an SMA record and part was that the two managers executing the fund strategies were only assistants on the SMA strategy. Both of those conclusions helped me tighten the criteria for funds I've written about. That played out in the case of Auer Growth (AUERX), where the senior Mr. Auer managed his retirement account to something like a 10:1 advantage over the broad market over some ridiculously long time; the junior Mr. Auer talked him into launching the strategy as a fund. I was, I hope, clearly skeptical about it. A one-star fund with bottom 2% performance followed.
The only queasy interval was Nakoma Absolute Return, which was managed by one of the guys at the U of Wisconsin's famous securities analysis program. These guys cranked out a string of first-tier managers and ran a very successful long-short hedge fund which they eventually offered to the public as a mutual fund. I 'fesseup to the problem with the fund a long time ago (07/11) in a discussion started by Vintage Freak:

The general problem is that Mr. Pickett has been skeptical about the US market for much of the decade, has maintained about as many short as long positions (bad idea in a rising market) and has been repeatedly wrong in security selection. None of which I would have predicted. Indeed, none of which I did predict.

I've become more cautious about hedge fund conversions as a result; my experience is that those often end up as being okay funds but mostly shadows of their former selves. Why? Rekenthaler made a good argument this month: hedge fund conversions are cherry-picked and we don't know anything about the rest of the crop. A hedge fund manager might have 10 funds, nine of which smell like the beach at low tide and one of which has had (maybe, "has lucked into") eye-popping results. The existence of the nine dogs doesn't have to be disclosed so we falsely assume that the one winner is representative of the managers' skills. While that's not always the case - that is, some hedge fund conversions produce reputable mutual funds - it's something that we need to approach with skepticism.
--
I'm mostly able to sleep at night when I consider the other funds we're written about. Mostly. Some have been spectacular successes, which is nice, but I draw more comfort from the fact that most of the managers (including Mr. Cinnamond) have invested heavily in their funds and have done precisely what they said they were going to do. That is, they were disciplined and true to that discipline. Mr. Barbee (AVALX) told you he was going to stay fully invested, at all times, in the tiniest and cheapest stocks in existence. It's been clear from Day One that that's a rocket-and-crash discipline. The fund made a mint during the 2000-02 bear, dipped by 65% in the 2007-09 one, and is beating the competition by over 300 bps since. Its cumulative (i.e. compounded) advantage since launch is huge. That said, I'd never invest in it since I much prefer not to have my long-term returns punctuated by apocalypse. But I'm perfectly comfortable with what we wrote about it.
For what that's worth,
David