Jack Bogle the 88-year-old founder and retired CEO of the world’s largest mutual fund company, Vanguard, which manages $4.5 trillion in assets remains candid and vocal despite his recent heart transplant.
In Autumn Bogle released his 10th edition of one of his best-selling books entitled, “The Little Book of Common Sense Investing.”
“I seek the truth… In my long experience, one thing I know is that truth is elusive”
In a recent interview with CNBC Bogle revealed five of his forecasts for the global financial market in 2018 and beyond.
1. The US market is less risky than the global market.
“U.S. companies are innovative and entrepreneurial,” Bogle said. As he points out, over the long-term investing outside of the domestic market doesn’t guarantee higher returns.
2. Stocks will return about 4% annually over the next decade or so rather than the 10% average annual returns of recent decades.
“My guess — an informed guess, but still a guess — is that by decade’s end the P/E ratio might ease down to, say, 20 times or even less.
Such a revaluation would reduce the market’s return by about 2 percentage points per year, resulting in an annual rate of return of 4 percent for the U.S. stock market,” wrote Bogle in the Little Book of Common Sense Investing.
“Avoid bitcoin like the plague. Did I make myself clear?”
3. Bogle is forecasting that a bond portfolio will return about 3.1% annually over the next 10 years.
4. The lower returns will put pressure on Wall Street firms.
“The main force reshaping investing is the index revolution,” he said. “Forty-one percent of all stock assets are in passive investments, and it’s growing every day.”
5. Impact investing could be less effective than advocates hope.
“Every human being has to decide whether improving any social situation is more important than having a comfortable retirement,” he said.