Tags: Bogle | Stocks | Mistake | avoid

Bogle: Avoiding Stocks Right Now Is a Big Mistake

Wednesday, 08 August 2012 07:51 AM

Despite calls from legendary investor Bill Gross that stocks have seen their day, and despite fears that investments aren't safe due as evidenced by the technical glitch at Knight Capital that rattled markets, stocks are a necessity in a portfolio, said Jack Bogle, founder of The Vanguard Group.

"Knight Capital is meaningless for anyone in the market for the long haul,” Bogle told CNBC. "In fact, you're probably in a mutual fund and you can pat yourself on the back for being smart."

Mutual funds tend to spread risk across a basket of stocks and hedges.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

Bill Gross, the co-founder and co-chief investment officer of bond giant Pimco, said recently stock investing as most know it is becoming a thing of the past, as low returns will require many Americans to work longer before retiring.

"If financial assets no longer work for you at a rate far and above the rate of true wealth creation, then you must work longer for your money," Gross wrote in his August investment letter.

"The cult of equity is dying," Gross added.

"Like a once bright green aspen turning to subtle shades of yellow then red in the Colorado fall, investors’ impressions of 'stocks for the long run,' or any run, have mellowed as well."

For Bogle, calls that equities are dead aren't new: magazines headlined such stories back in the late 1970s.

“It’s always a question of balance but anyone who is out of stocks right now is making a big mistake," Bogle said.

Other noted investors have said that the sky is not falling in equities markets, including John Graves, author of "The 7% Solution: You Can Afford a Comfortable Retirement."

"Look for opportunities when everyone else is running for the exits,” Graves told Newsmax.TV in an exclusive interview.

"It reminded me of 1979 when the cover of Time had the same story — the death of equities. So there’s always a reason for a concern but there’s always more reason for optimism," Graves added.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

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Wednesday, 08 August 2012 07:51 AM
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