Tags: Vanguard | Jack Bogle | Trump | Stock Market Rally

Vanguard's Jack Bogle Doesn't Feel 'Super Confident' About Trump Market Rally

 (AP/Mark Lennihan)

By    |   Wednesday, 22 February 2017 10:21 AM

Investment guru Jack Bogle isn’t impressed despite the stock market seemingly setting new record highs each and every day so far in President Donald Trump’s administration.

"I don't feel super confident," the Vanguard founder told CNBC. He explained that he prefers to look at the market over 10-year intervals instead of on a daily basis.

"In 10 years, looks like our GDP might grow at 2 percent, if we're lucky. And sooner or later, the link between GDP, gross domestic product and corporate profits is about 0.98 [percent]. So I look for a slowing in profit growth," Bogle said.

With the way the economy is structured today, Bogle said it would a struggle to reach the White House's goals of 3 percent to 3.5 percent growth, CNBC explained.

For plain-vanilla investment advice, Bogle touted indexing, or adjusting asset weights in a portfolio so that its performance matches that of an index.

One way investors do so is by investing in index funds such as those offered by Bogle's Vanguard, which started the first index fund for individual investors in 1976, CNBC explained.

"The reason indexing has done so well is because it gives the investor a fair share, his or her fair share, of whatever market returns we get. And that's all there is to it," Bogle said, touting the investment strategy's low-cost, low-turnover rate, and high tax efficiency.

Trump's promises to cut taxes and roll back regulation have fueled hopes of a pick-up in the U.S. economy, sending stock markets to record highs, with the Dow Jones industrials up 13 percent since his election victory. 

But hedge fund managers like Seth Klarman, who has been running $30 billion Boston-based hedge fund Baupost Group since 1982, worry Trump's polices may cause a sharp rise in inflation, while his protectionist tone on trade could hit other major economies, Reuters reported.

"We could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst about the stability and wisdom of American leadership," Klarman said in a letter to investors on Feb. 8 that was shared with Reuters.

"The Trump rally – in my opinion – saw global markets price in a huge amount of hope around his campaign promises, while ignoring the knock-on risks to fragile economies like Japan that export to the U.S.," said Shannon McConaghy, a portfolio manager at London-based Horseman Capital.

While his first few weeks have certainly been volatile and controversial, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz recently told TheStreet.com.

Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said.

“If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”

Horowitz's new book, "The Big Agenda: President Trump's Plan to Save America," reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.

Horowitz's new book is the first book about the Trump presidency and has soared to the top of the Amazon bestseller charts, becoming the No.1-selling book on the web. Trump will also lead the way in making infrastructure spending to boost the U.S. economy, Horowitz said.

“If the economy grows as it will under Trump, there's going to be a lot more money to spend,” he said.

"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now

(Newsmax wire services contributed to this report).

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Jack Bogle isn’t impressed despite the stock market seemingly setting new record highs each and every day so far in President Donald Trump’s administration.
Vanguard, Jack Bogle, Trump, Stock Market Rally
Wednesday, 22 February 2017 10:21 AM
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