Bogle: Recession Will Be Long, But Market Bottom Has To Be Near

Vanguard Founder John Bogle continues to see a lengthy period of continued pain ahead for the U.S. economy — but now he says the stock market has to be getting near a bottom.

Bogle, who in mid-November of 2007 — just weeks before the current recession began — said there was a 75 percent chance that the U.S. would enter a recession as consumers pulled back, told Bloomberg that the recession could last another two years. “We’ve got a real problem on our hands in the economy,” he said. “I think it’s going to take at least a year-and-a-half to two years before we start to see some upturn in the economy.”

But, Bogle added, the stock market has “got to be discounting an awful lot of the bad economy that we see ahead. … We’ve got to be getting close to the lows in the stock market at this point, finally.”

A word of caution, however: Asked whether that meant that he was advising investors who’ve been waiting on the sidelines to jump into the market, Bogle was about his anti-market-timing stance: People waiting for a bottom to hit aren’t investors, they’re speculators, he said, and he has no advice for them. But, he says, if a true “investor” has his or her asset allocation right, they should keep on investing in stocks right now.

Regarding the government stimulus package, Bogle thinks U.S. leaders are doing the best they can in this unprecedented situation. “I find myself constantly marveling at how really a relative handful of financial buccaneers got us into this catastrophic global financial mess,” he said, adding that that has left the government with a ton of work to do. He says he likes most of the stimulus bill, though he thinks it has a little too much pork, and a little too much spending on long-term items that, while valuable, won’t help with the current crisis. “There aren’t any perfect solutions,” he said.

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