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Jack Bogle – founder of the Vanguard Group who has long been of the buy-andhold vein of investing – has some terse advice for investors.On MoneyLife with Chuck Jaffe, Bogle gave this recommendation:
Get out of the casino, own Corporate America and hold it forever. No trading, no nothing. You don’t need to trade; you don’t need to worry about the market. To protect yourself from the bumps the stock market will scare you with – even though it shouldn’t scare you because there have been bumps in the market since the beginning of time – have a bond position to go along with your stock position.
He gives the lion’s share of the blame for the new-age investment model, which focuses on generating short-term returns, to the financial services industry. However, Bogle questions why investors allow themselves to be caught up in the frenzy. “Why do they do it?” Bogle exclaimed, “They all think they are above average.”
To distinguish between investment and speculation, Bogle explains that “Speculation is, by and large, about buying and holding stocks; the values of stocks…come and go, sometimes for no reason.”
Bogle advised investors to ignore outside events such as the election or the fiscal cliff and invest money in companies that will “earn a return on it in a competitive world. …That’s what investing is all about, owning companies.”