Tags: Bogle | stocks | US | foreign

Bogle: 'If You're Going to Jump In and Out' of Stocks, 'You Will Be Badly Defeated'

By    |   Wednesday, 17 December 2014 12:06 PM

Legendary Vanguard Group founder Jack Bogle has always advocated long-term, buy-and-hold investing.

And he's not changing his tune now, though he warns investors to prepare for more volatility and perhaps a substantial market decline.

The CBOE Volatility Index (VIX), which measures expected volatility in the S&P 500 index, has soared 94 percent since the index hit its record high Dec. 5.

"If you're going to jump in and out of anything on a moment's notice, you will be badly defeated," Bogle tells CNBC. "That's a speculative strategy. Times of great market turbulence are just awful times to make investment decisions."

And he recommends investing in U.S. stocks over their foreign brethren. Foreign stocks may be cheaper, but they're also riskier, he said. And big U.S. companies earn about half their profits overseas anyway.

"I'd rather bet on the U.S.," Bogle notes. "This is a great nation with great places to invest. Great financial institutions, great government institutions, although a little bit faltering."

However, if you do want to invest internationally, "maybe do no more than 20 percent," he advises.

"The reason foreign stocks appear so cheap because there are a lot of risks there that you're taking. Just think of Russian right now. Think of the problems facing Great Britain and Japan and France — the three largest markets in the developed area. I think they have a higher risk and they deserve to be cheaper," Bogle explains.

"They haven't had a good year at all. The U.S. is probably 10 or 15 percentage points ahead this year and even better for the last four or five years and that's a little bit of a warning signal, I admit, but I don't really think about jumping around based on relative valuations unless they get terribly extreme."

MarketWatch columnist Philip Van Doorn says dividend stocks represent an attractive sector of the market now.

"The bottom line is that there are plenty of good dividend stocks to be had while interest rates remain at historically low levels," he writes. A long-term commitment backed up by your own research can help ensure that the income keeps flowing."

Among those he suggests looking at are LyondellBasell Industries, Frontier Communications, Entergy, CenturyLink and Coach.

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Legendary Vanguard Group founder Jack Bogle has always advocated long-term, buy-and-hold investing.
Bogle, stocks, US, foreign
Wednesday, 17 December 2014 12:06 PM
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