Jack Bogle, the legendary mutual fund pioneer behind Vanguard, was on Fox Business News speaking with Neil Cavuto speaking about the Treasury Department’s efforts to fight money laundering.
Near the end of the interview, Cavuto asked Bogle for his thoughts on the markets. Bottom line: the economy justifies current stock market valuations and low interest rates confirm confidence in the U.S.
“We do have to get some clarity as to what the future holds for the governments role in taxes, capital gains, dividends. I think it’s less that we get the right rules than that we get some rules. But the fact of the matter is our economy, U.S. GDP, is the best performer in the developed world by a good margin and the rest of the world has not made this kind of recovery. China is of course much more rapidly growing, but seems to be sinking quite a bit.
“Despite those economic conditions, confidence is at a really high level. You look at a 1% government bond, the 5-year note. You’ve got a 3% corporate bond. Those yields don’t get much lower. That’s a vote of confidence. Look at the stock market, sell around 17 times earnings. That’s not exuberant; that’s just about where it ought to be. So it suggests a good level of confidence at a level that’s short of speculation.”
Bogle is one of the few who isn’t buying into the biggest myth in the stock market that things are just being buoyed by the Fed.
Watch the whole interview here courtesy of FoxBusiness.com:
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