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 a 3% return by buying longer-term bonds. He also notes that mutual fund fees, and investor behavior (such as buying high and selling low) are likely to reduce returns even further, perhaps as low as 1.5% or even to negative returns. At the same time, however, he notes that he has “always taken the conservative line” so returns may be significantly better than his estimate.