Steadfast FinancesJack Bogle Thinks American Business is On Sale! - Steadfast Finances

Jack Bogle Thinks American Business is On Sale!

Filed in Index Funds , Investing 101 2 comments

Jack Bogle, Vanguard founder and index fund guru, made an interesting statement that caught my attention during a CNBC appearance this week.

American business is on sale.

When an 80 year old stock market veteran comes out and says the market is a selling at a good price, young investors like me tend to stop what we’re doing and listen.

I suspect that with Cramer’s recent meltdown in the face of the “In Bogle We Trust” versus “In Cramer We Trust” debate, and negative publicity surrounding some of CNBC’s content, old school CNBC viewers like me will begin seeing more of Bogle and anyone who practices the Boglehead investing thesis.

[RSS Readers please click through for CNBC/Bogle video]

Highlights of the interview:

  1. Jack Bogle is 80 years old and seen his share of market cycles.  When a seasoned professional of Bogle’s age and experience level decides to share a few thoughts, the smart folks tend to listen.  Regardless of your investing thesis, you are a fool to ignore their advice considering how much they’ve seen and experienced during their career.
  2. Index fund returns have been flat or negative for the last decade.  The last decade has been bad for all of us in the index fund world, but when you get two decades — the 1980s and 1990s — with a 17% return each year, you can’t really expect that much out of the next decade.
  3. American business is on sale!  At the beginning of this decade, you were paying about a $6 for every $1 of S&P 500 book value.  Now you’re paying about $1.80 for every $1 book value.
  4. More federal regulation for the markets.  In Bogle’s eyes, capitalism has failed investors and he believes investor agents (mutual fund managers, pension fund managers, etc) should be federally regulated to better uphold the interests of those who trusted them with their money.

The main point I take away from this interview with Bogle is his call that the market is cheap compared to early 2000 tech bubble, as well as during the markets highs in 2007.

Just one more reminder that the old masters — like Bogle, Buffet, and the like — are buying and finding tremendous value while the market is once again correcting itself.

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Posted by CJ   @   9 May 2009 2 comments
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