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Vanguard Founder Jack Bogle: Trump 'Is the New John Maynard Keynes'

Vanguard Founder Jack Bogle: Trump 'Is the New John Maynard Keynes'

(Donald Trump/John Maynard Keynes)

By    |   Tuesday, 13 December 2016 11:50 PM

Investment guru Jack Bogle says President-elect Donald Trump’s intention to boost federal spending makes him “the new John Maynard Keynes.”

“The founder of mutual-fund giant The Vanguard Group predicts that U.S. stock investors will benefit — at least shorter-term — if the U.S. government puts Keynesian economics into practice. Keynes, the legendary British economist who died in 1946, proposed that governments should borrow and spend money to boost economic activity when national economies are suffering through a downturn,” MarketWatch explained.

”He is a Keynesian who wants to build the economy … to spend a lot of money, have the government undertake a lot of spending and borrowing in the public marketplace to add to aggregate demand for our goods and services here in the U.S.,” Bogle said of Trump in an interview on “MoneyLife with Chuck Jaffe.”

Bogle said he is "convinced" that Trump’s strategy “is very good for the short-term in the stock market.” However, a federal government bogged down with more debt would eventually damage stock portfolios.

“I am absolutely persuaded that the following things are bad for the stock market in the long run,” Bogle notes. “I’m thinking here of the gap between the wealthy and the poverty-stricken increasing as we go, and going to get worse. I’m thinking about racial divisions in the country, and I think they’re not going to get any better under the new administration and could even get worse,” he said.

The Dow Jones Industrial Average closed Tuesday at its seventh consecutive record high and moved closer to 20,000 points. The Dow is fewer than 90 points from crossing 20,000. The Dow has climbed about 9 percent since the Nov. 8 election, with gains fueled by expectations that Trump will reduce taxes and regulation and stimulate the economy.

He also pointed out some other possible damage Trump's plan could inflict over time.

“I’m thinking about global trade to the extent global trade is threatened by the president-elect’s program. That’s not good. … To the extent we back away a little bit from Europe and NATO — which he has talked about doing — the bulwark against communism in Europe. Each one of these things — the wealth gap, the racial gap, the threat to global trade, the failure or apparent failure to give NATO the kind of support we have given them in the past — is, in the long run, bad for our society, bad for our economy, and bad for our stock market,” he said.

“The stock market is looking to the short term; it always has and I’m sure always will,” he says. “But when you look at the long term, I would say, ‘Be a little careful today. Be a little careful.’”

However, Bogle urges savvy investors to stay in the market and not abandon hope - or your investments. “Only a fool would ever tell you to do that,” he says of an adviser who would tell you to dump all your stock holdings.

“None of us knows what’s going to happen, but I create a series of reasonable expectations, and they have been highly accurate over 10-year periods in the past — remarkably so — and so I stick with those reasonable expectations,” Bogle said.

Other investment gurus are a bit more optimistic on what a Trump presidency will mean to the economy and investors.

Veteran financial guru Larry Kudlow, who served as the Donald Trump campaign's senior economic adviser, predicts to Newsmax TV that Trump is assembling the type of cabinet “to end the White House war against business that we've experienced under the Obama administration.”

“There has been a war against business from day one and that is going to end,” Kudlow told Steve Malzberg on “America Talks Live.”

“I think Trump's Cabinet picks have been very good and very skillful,” said Kudlow, a Newsmax Finance Insider, radio talk-show host and CNBC senior contributor.

Kudlow also predicted to Newsmax TV that the record-setting stock rally “may go on for years” because the market “likes what it sees” before the president-elect has even officially taken office.

Stocks could drop in a natural turn of events, but for the most part, get ready for more record-high stock-market finishes, he told Malzberg. "The Trump rally may go on for years,” said Kudlow.

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Investment guru Jack Bogle says President-elect Donald Trump's intention to boost federal spending makes him "the new John Maynard Keynes."
jack bogle, donald trump, john maynard keynes, invest
Tuesday, 13 December 2016 11:50 PM
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