Investment guru Jack Bogle is hoping that Donald Trump has a change of heart about many of his campaign vows once he moves into the White House or else he predicts America will be “deeply hurt” by all of the president-elect’s “negatives.”
Meanwhile, Vanguard Group's founder and former CEO says were are “in the middle of a revolution” with index investing.
But he’s not as optimistic as Trump prepares to take office.
“It’s going to be a long, long road,” Bogle told Bloomberg. “I am hoping that, when confronted by the responsibility of walking into the White House with the enormity of his responsibilities, I’m hoping he will be Saul on the road to Damascus. That’s a little Biblical reference to when Saul had his complete conversion to Christianity. I don’t know how likely that is, or whether you can really change that inner man that we’ve seen too much of,” Bogle said.
“Even more important, in the long term this nation will be deeply hurt by the failure to be the nation we’ve always been, which is a place everyone else in the world wants to come," Bogle said.
"Walls make no sense. Any substantial reduction in our trading with the rest of the world has negative effects—on our society, our economy, and our markets. All these things are negatives. And there are many others that are part of his platform that he’s going to have to move away from. There’s a chance he will. Whether he’ll be Saul on the road to Damascus is another question,” Bogle said.
Vanguard Group's founder and former CEO started the indexing revolution for retail investors in 1976 when he launched the Vanguard 500 Index Fund. The fund, which just passed its 40th anniversary, had $205 billion in assets as of Aug. 31.
Index investing is commonly defined as purchasing shares of an index fund. Index investing requires less research because it is an investment in all of the securities in an index. This is different from investing in mutual funds because mutual funds can be comprised of multiple stocks from different indexes, as opposed to index investing which deals with multiple stocks trading on the same index.
“What’s clear is we’re in the middle of a revolution caused by indexing. It’s reshaping Wall Street, it’s reshaping the mutual fund industry. And it’s doing something very simple: shifting the allocation of stock market returns away from Wall Street and toward Main Street. We’re beyond the beginning, but nowhere near the end,” Bogle said.
“Actively managed funds have been losing to index funds, in terms of cash flow, for eight consecutive years now. And it’s cascading now. Investors love it; Wall Street hates it. Mutual fund managers don’t like it either. Money is leaving them and coming to us every single day. We’re now doing a billion dollars a day. This is just totally beyond anything else in the industry’s history,” he said.
“People are going to be using more index funds in 2025 than they are today. This is an underlying, fundamental trend—not one built on opinion, but on the relentless rules of humble arithmetic,” he said.
In a wide-ranging interview, Bogle offered sage advice on a variety of topics:
- “If you put nothing away for retirement, I can tell you, to the last penny, how much you will have when you retire: nothing,” he said.
- " I would be appalled if they did away with the inheritance tax. Of all the useless changes that help only a tiny percent of Americans, what is the point? It’s almost sick to think about eliminating the inheritance tax," he said.
- "Social Security has to be fixed, too. It’s a political problem, not an economic one. Congress is just going to have to make sure it works mathematically," he said.
- "Infrastructure has to happen. We can borrow now at low rates. But how much debt can we handle? One of the problems with our great republic is that it’s so easy to borrow in the short term," he said.
- " The stock market isn’t cheap, and so I worry about that. Cash is so hopeless that you almost can’t afford not to invest, but you’ve got to be fairly conservative. I wouldn’t go long on the interest rate side. I would personally maybe go half short, half intermediate. Even though in the long run, longs will do better because their interest is higher. So we have market risk, and then we have all the other risks: war, religious uprisings, nuclear weapons, disease, global warming. We live in a risky world. But you have to invest," he said.
- "If you put nothing away for retirement, I can tell you, to the last penny, how much you will have when you retire: nothing," he said.
However, not all gurus are as wary of Trump's economic blueprint to make America great again.
Financial guru and Donald Trump adviser Wilbur Ross told Newsmax TV that the president-elect's "very progressive" tax strategies will mean lower financial burdens for all companies and eventually "every single category of wage earner."
The WL Ross & Co. chairman and CEO told "Newsmax Prime" host J.D. Hayworth said Trump's deregulation plan will also help revive growth.
"Capital investment by corporations has been one of the big laggards in the recent very mild, weak recovery," Ross told Hayworth.
And that entire economic recovery will be kicked into higher gear by Trump's proposed corporate tax rate cut from the 35 percent maximum rate to 15 percent maximum, he said.
"The tax cut . . . in plain English means that anybody who's paying the full tax now as a business will get an immediate 30 percent boost to post-tax earnings," he told Hayworth.
"Very few companies have earnings growth of 30 percent in a year, so that's a wonderful thing and it's a permanent thing," he said, explaining how Trump will also slash taxes for all levels of wage earners.
"Every single category of wage earner, with one or two little flukey anomalies that'll be dealt with in the final legislation, gets a reduction," he added.
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