Bogle: Focus on U.S. Equities, Not International Stocks

Vanguard founder Jack Bogle says stocks could double in the next decade, far outpacing bonds, but also says the global economy is in worse shape than many realize.

“I expect stocks will have a dividend yield of about 2 percent, with stock price appreciation of maybe 6 percent from earnings growth,” Bogle recently told CNBC when asked about his long-term forecast. “So you might see a total return of around 7 to 8 percent. For bonds, I expect around 3.5 percent. With compound interest, stocks could double in the next decade and bonds will go up about 50 percent.”

In the short term, Bogle declined to offer a prediction. ” The market is at a relatively fair value now, but may be a bit overvalued for the long-term,” he said. “But I would no more predict what will happen in 2011 than fly to the moon. Anybody who goes into the market to make money specifically in 2011 should either be spanked or have their head examined. It’s just too short of a period to predict, and it’s a crap shoot.”

Bogle says he’s never seen a more difficult time to invest, citing the huge deficits hanging over the economy, and problems with the global economy, which he says is “teetering a great deal more than people think it is.” Bogle also talks about why he continues to think that index fund investing is the best choice for individual investors, and why he thinks they should focus their efforts on the U.S. — not international stocks.

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