While it may be reasonable to use long-term market data to help shape return projections, it should be a starting point which is then adjusted “up or down based on experts’ opinions about current valuations and the investor’s own time horizon,” writes Morningstar’s Christine Benz. Benz offers insights from different market experts regarding return assumptions: John Bogle, founder of Vanguard Group—in a September 2016 interview, Bogle said he expected “muted returns for both stocks and… Read More
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… Read More
Jack Bogle says the market seems to be ignoring some big risks in the financial world, and he thinks stocks are poised for a below-average return over the next decade.
In a wide-ranging recent interview with Fox Business News, Vanguard founder John Bogle says it’s reasonable to expect stocks to return about 7% to 8% per year in this decade, and stresses that investors should avoid the temptation to speculate in the stock market. “Reasonable expectations are that we will have returns of 7-8% in this decade in equities, and that bonds will yield 3-4% in the same time period,” Bogle says. “The odds are… Read More
Vanguard found John Bogle says investors should view stock market numbers with skepticism, particularly in terms of historical market returns being used as a guide for the future. “Even if we accept the belief that past market returns are an accurate representation of reality, the idea that future returns will centre around the past is an illusion,” Bogle recently wrote for the Financial Times. “During the past century, for instance, the US stock market has… Read More
Vanguard founder Jack Bogle says stocks could double in the next decade, far outpacing bonds, but also says the global economy is in worse shape than many realize. “I expect stocks will have a dividend yield of about 2 percent, with stock price appreciation of maybe 6 percent from earnings growth,” Bogle recently told CNBC when asked about his long-term forecast. “So you might see a total return of around 7 to 8 percent. For… Read More
While many investors are focusing on emerging market stocks, which have done quite well in the past decade, Vanguard found John Bogle is skeptical of them. Bogle tells Morningstar that investors keying on such stocks may be suffering from “rowboat syndrome” — much like someone rowing a boat, they have their eyes on where they are coming from, but not where they are going to. He says he doesn’t invest internationally because he expects the… Read More
Vanguard founder Jack Bogle tells Morningstar that he thinks stocks will outperform bonds over the next decade — but that investors need to be able to deal with volatility if they want to profit from stocks over that period. Bogle says that while no one knows for sure what the markets will do in the future, there are “sound bases for realistic expectations about future market returns”. Bond returns, for example, are “very heavily shaped… Read More
Investment legends Bill Gross and Jack Bogle offered differing opinions on what the future holds for the economy and the stock market in this recent CNBC interview. Gross reiterated his belief in a “new normal” in which both stock and bond investors need to rachet down their expectations. Bogle, meanwhile, says it’s reasonable to expect stocks to post annualized returns of a little more than 8% over the next decade. JPMorgan Funds Chief Investment Strategist… Read More
A decade ago, Vanguard founder and investment legend John Bogle said bonds were in for a nice run and stocks were headed for tough times — a prediction that turned out to be quite true. Now, he sees better times ahead for stocks. Bogle thinks stocks should do “about twice as well as bonds over the coming decade,” Kathy Kristof writes in the Chicago Tribune. Bogle also thinks gold, which has been quite hot over… Read More
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