Tags: jack bogle | donald trump | economy | markets

Jack Bogle: Trump Policies Could Be 'Bad for Society, Economy, Markets' in Long Run

John “Jack” Bogle, founder of the Vanguard Group (AP Images/Mark Lennihan)

By    |   Monday, 21 November 2016 03:25 PM EST

Investment guru Jack Bogle warns savvy investors not to jump to any conclusions about the stock market’s ride to new record highs in this honeymoon phase with President-elect Donald Trump.

Vanguard Group's founder and former CEO said he thinks most investors have been too shortsighted because some of Trump’s campaign vows could hurt U.S. markets in the long term if they are carried to fruition.

"In the long run, I have a concern that anything that divides our economy further in terms economics or race is bad for the society, bad for the economy and bad for the markets," Bogle told CNBC.

Bogle listed raising trade barriers, breaking ties with Europe, and increasing the country's debt as potential policies the new administration has floated that could be especially bad for the economy.

"The new president's going to have to deal with a Republican Congress that is not particularly smitten with many of his ideas, so it's hard to know just what will go through," Bogle said.

"Any package of a lot of infrastructure spending at the same time as we reduce taxes is going to be very, very hard to resist politically, so I think it's going to happen one way or another," Bogle said.

Bogle also said Trump's tax reform measures, specifically his plans for cutting corporate taxes, could benefit markets.

He fears tax cuts would create deeper income inequality, calling the notion of lower individual taxes for the country's wealthiest class "not a very happy idea at all."

"We can pay our own way," he said. "We ought to give some tax relief to the people that really need it in this country, and there are an awful lot of them," he said.

Trump's "mixed bag" of Cabinet picks may serve as an early reflection of the president-elect's character, Bogle said, though he acknowledged that "it's still early" to tell what a Trump administration would fully look like. "His picks seem to me to be in a way quite extreme on the right side, said Bogle, who 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. 

However, not all gurus are as wary of Trump's economic blueprint to make America great again. 

Financial guru and Donald Trump adviser Wilbur Ross told Newsmax TV that the president-elect's "very progressive" tax strategies will mean lower financial burdens for all companies and eventually "every single category of wage earner."

The WL Ross & Co. chairman and CEO told "Newsmax Prime" host J.D. Hayworth said Trump's deregulation plan will also help revive growth.

"Capital investment by corporations has been one of the big laggards in the recent very mild, weak recovery," Ross told Hayworth.

And that entire economic recovery will be kicked into higher gear by Trump's proposed corporate tax rate cut from the 35 percent maximum rate to 15 percent maximum, he said.

"The tax cut . . . in plain English means that anybody who's paying the full tax now as a business will get an immediate 30 percent boost to post-tax earnings," he told Hayworth.

"Very few companies have earnings growth of 30 percent in a year, so that's a wonderful thing and it's a permanent thing," he said, explaining how Trump will also slash taxes for all levels of wage earners.

"Every single category of wage earner, with one or two little flukey anomalies that'll be dealt with in the final legislation, gets a reduction," he added.


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Investment guru Jack Bogle warns savvy investors not to jump to any conclusions about the stock market’s ride to new record highs in this honeymoon phase with President-elect Donald Trump.
jack bogle, donald trump, economy, markets
Monday, 21 November 2016 03:25 PM
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