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Jack Bogle Blasts 'FANG' Investing as 'Loser's Game'

Investment guru Jack Bogle (Mark Lennihan/AP)

By    |   Tuesday, 07 November 2017 02:46 PM

Investment guru Jack Bogle isn’t a fan of the current trading fad of flipping high-flying tech stocks.

In fact, such a “FANG" mentality is sure to come back and bite you.

FANG is the acronym for four high-performing technology stocks in the market as of 2017: Facebook, Amazon, Netflix, and Google (owned by Alphabet, Inc.). The term was coined by CNBC's "Mad Money" host Jim Cramer.

"Anything that gets investors into trading is a negative," Bogle told CNBC.  "Trading is a loser's game. Trading is short-term speculation," he said.

Bogle spoke on the eve of Intercontinental Exchange’s launch of a FANG+ index futures contract for traders.

The NYSE FANG+ Index is equal-weighted and will initially consist of the five core FANG stocks, including Facebook, Apple, Amazon, Netflix and Alphabet’s Google, plus another five actively-traded technology growth stocks -- Alibaba, Baidu, NVIDIA, Tesla and Twitter. The real-time NYSE FANG+ Index will be calculated and disseminated through the NYSE Global Index Feedunder the symbol “NYFANG.”

The launch of the futures contract on ICE Futures U.S. is designed to offer hedging of and exposure to the NYSE FANG+ Index with the capital efficiency of futures, and will complement the exchange’s equity index futures complex.

“Given their size, performance and innovation, the FANG stocks are among the most widely traded stocks and we’re pleased to offer a capital efficient means of accessing and hedging these growth stocks in a cost-effective way,” said Trabue Bland, President of ICE Futures U.S.

“We are leveraging our product development, index solutions and global feeds to develop, distribute and trade this new index future.”

However, Bogle begs to differ.

"If you want to do such a crazy thing, it certainly makes it easy to do. ... I have no doubt it's a liability," Bogle told CNBC. "I think the odds are very bad. It appeals to the trading instincts in investors. ... If you like gambling, if you like casinos, these things are really, really, really good."

He recommended investors focus on the long term by buying index funds that minimize trading transaction costs.

And you'd be wise to follow Bogle's advice. Why?

Because one of the most respected investment gurus of all time recently cited Bogle as his hero.

Billionaire investor Warren Buffett praised Bogle in his annual letter to Berkshire Hathaway Inc. shareholders.

The pioneer of indexing was once an outcast in the investment world as he eschewed riches to provide real value to American investors, Buffett wrote.

“In his early years, Jack was frequently mocked by the investment-management industry,” Buffett wrote. “Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”

Bogle 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, Bloomberg reported.

(Newsmax wire services contributed to this report).

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Investment guru Jack Bogle isn’t a fan of the current trading fad of flipping high-flying tech stocks.
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Tuesday, 07 November 2017 02:46 PM
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