Bogle: No Stock Pickers in What Looks Like an Expensive Market

Jack Bogle, founder of the Vanguard Group, tells CNBC that “there is no such thing as a stock picker’s market.” He goes on to say that the phrase, “a stock picker’s market is meaningless” but catches on and gets investors’ attention. Bogle, who is best known for popularizing passive, low-fee index investing, goes on to say that the stock market returns will likely be lower over the next ten years vs. what they have been in the past. Bogle says that with the market’s P/E of 22 and dividend yield of 2%, investors can expect to get a decade of […]

Jack Bogle’s Advice for the Individual Investor

The AAII Journal published an interview with Vanguard founder John “Jack” Bogle, to whom AAII gave its Cloonan Award for Excellence in Investment Education in 2015. The interview focuses on advice for the individual investor. Bogle said, “by far the best way to own equities is to own them through either a Standard & Poor’s 500 index fund or a total U.S. stock market index fund” and that an investor should “hold it forever.” He also emphasized that investors should minimize costs, describing investing as “a zero sum game,” except that “it’s not a zero sum game” once fees are […]

Bogle’s Straightforward Formula for Estimating Future Stock Price Returns

The Wall Street Journal’s Money Beat column highlights the value of simplicity in investment prediction models. Profiling work by John C. Bogle, founder of Vanguard Group, that draws on historical data, the piece highlights his three-factor formula for determining the “sources of return.” These are: Starting yield (annual dividends divided by stock price) Earnings growth Speculative return (changes in pricing by investors) The first two factors can be grouped together, according to Bogle, as “investment return” because they reflect what companies actually generate rather than speculation on pricing by the market. “If you don’t like my numbers,” Bogle says, “you […]

John Bogle Suggests Low Returns Likely Over the Next Decade

John Bogle, founder of Vanguard Group, has a pessimistic prediction for markets over the next decade. He says that he divides his expected return forecast into two segments: investment return and speculative return. For the first, he combines 2% dividend yield with estimated earnings growth of 6% to reach a total of 8%. However, his speculative return number then incorporates predictions about the price-to-earnings ratio, which he expects to fall from an estimated 20 times underlying value to about 15 times, yielding a speculative return of about 4%. For bonds, Bogle suggests that investors may be able to realize about […]

John Bogle Suggest Low Returns Likely Over the Next Decade

John Bogle, founder of Vanguard Group, has a pessimistic prediction for markets over the next decade. He says that he divides his expected return forecast into two segments: investment return and speculative return. For the first, he combines 2% dividend yield with estimated earnings growth of 6% to reach a total of 8%. However, his speculative return number then incorporates predictions about the price-to-earnings ratio, which he expects to fall from an estimated 20 times underlying value to about 15 times, yielding a speculative return of about 4%. For bonds, Bogle suggests that investors may be able to realize about […]