×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Skip to main content
Tags: Bogle | US | Europe | invest

Bogle: Investing in US and Going Global Are Pretty Much the Same Thing

By    |   Tuesday, 27 January 2015 10:36 AM EST

The European Central Bank (ECB)'s quantitative easing program is not enough of an incentive for Jack Bogle, founder of The Vanguard Group, to recommend that Americans dive into European stocks.

In his view, American investors don't really need to look abroad for foreign stock investments because they already get enough global exposure from U.S. stocks.

"You don't need to do international investing because the U.S. is an international economy," Bogle told CNBC. "We get half of our earnings, half of our revenues from companies outside of the U.S., from operations outside of the U.S. So you are an international [investor], if you will, right here in the U.S., and I don't see any reason to add more."

The ECB last week launched a massive QE program that could stimulate equities there. But Bogle is not taking the bait, and warns that direct investment in foreign stocks adds currency risk.

"Don't go over 20 percent in non-U.S. securities because you earn your money in dollars, you spend your money in dollars, you save your money in dollars, you invest your money in dollars, you'll retire earning money in dollars with social security checks," he said. "So you're taking a currency risk when you go abroad in a different way."

Over the long haul, Bogle noted the S&P 500 has outperformed international stocks in any event because the U.S. economy has been the strongest. "We have a more diversified economy, better technology economy," he said.

Bogle's remarks on foreign stocks notwithstanding, some investors have speculated European equities could now follow the example of U.S. stocks, which rallied sharply to historic highs during the recent years of massive QE by the Federal Reserve.

For U.S. investors to take advantage of such a similar European uptrend, they would have to overcome the fact that the euro has been falling sharply, so the currency translation from euro-priced stocks to U.S. dollars may not be favorable.

In addition, there are also doubts in some quarters whether European stocks are bound to follow the QE lead of the U.S. and go higher at all.

"Most investors are generally aware of the reflationary effects of QE conducted by the U.S. Fed," GaveKal Capital investment advisers wrote on a blog.

"It is reasonable to imagine that, in announcing its intent to embark on Europe's own version of quantitative easing, the ECB anticipates a similar effect with respect to European equities."

However, GaveKal said that when a chart of ECB assets is overlaid against the performance of the MSCI Europe broad stock market index, it tells a surprising story.

Those results show European equities "have risen as the central banks' assets have contracted over the last several years, implying that asset purchases could actually be negative for stocks," the advisers noted.

"We have no way of knowing for sure whether or not this pattern will hold, but this chart would seem to suggest that MSCI Europe equities could decline approximately 30 percent by the end of 2016."

© 2024 Newsmax Finance. All rights reserved.


Finance
The European Central Bank (ECB)'s quantitative easing program is not enough of an incentive for Jack Bogle, founder of The Vanguard Group, to recommend that Americans dive into European stocks.
Bogle, US, Europe, invest
500
2015-36-27
Tuesday, 27 January 2015 10:36 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
TOP

Interest-Based Advertising | Do not sell or share my personal information

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved
Download the NewsmaxTV App
Get the NewsmaxTV App for iOS Get the NewsmaxTV App for Android Scan QR code to get the NewsmaxTV App
NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved