Tags: Bogle | stock | market | volatility | speculative

Bogle: Stock Market's Recent Volatility 'Mostly Speculative'

By    |   Wednesday, 29 October 2014 10:24 AM

Vanguard Group founder Jack Bogle isn't too worried about the recent spate of volatility that sent the S&P 500 index down 10 percent from its Sept. 19 record high to its Oct. 15 low and then back up 9 percent since then.

The CBOE Volatility Index (VIX) more than doubled during that first period and has slid 43 percent since Oct. 15.

"This most recent spate of jumps up and down and around have mostly been speculative in nature," Bogle tells Morningstar.

"Investors aren't doing anything, I don't believe, in this market. But speculators, when there is a piece of news, or they think there is a piece of news, they think about how other speculators will react, and they react first."

"So, it's totally a speculative market. And if you don't believe that, look at the trading volumes."

True investors understand that stocks are valued based on earnings and dividends, Bogle explains. So the market's fluctuations are "a tale told by an idiot: full of sound and fury, signifying nothing," he says quoting Shakespeare.

"I don't think that anyone would say the market is cheap. It's gone up about 65 percent in the last decade — a pretty good decade, that's 2004 to 2014 — and yet earnings have gone up 85 percent, even more, and dividends have gone up 100 percent. So, the fact that it's way up is supported somewhat by the fundamentals," Bogle adds.

"If there is a fly in this particular ointment, it's that I don't trust the earnings. Corporations are pressing very, very hard to get higher and higher earnings."

David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, isn't fazed by the recent volatility either.

"For stocks, it always comes down to the Fed and the economy," he tells Business Insider. "The reality is that bear markets do not just pop out of the air. They are caused by tight money, recessions, or both. These conditions do not apply, nor will they until 2016 at the earliest."

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Finance
Vanguard Group founder Jack Bogle isn't too worried about the recent spate of volatility that sent the S&P 500 index down 10 percent from its Sept. 19 record high to its Oct. 15 low and then back up 9 percent since then.
Bogle, stock, market, volatility, speculative
336
2014-24-29
Wednesday, 29 October 2014 10:24 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved