Bogle's 'Reasonable Expectations' for Market Returns
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- Опубликовано: 26 авг 2024
- As part of the annual Bogleheads event, Christine Benz sat down with Jack Bogle to get his forecasted returns for the major asset classes.
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RIP Mr. Bogle. Thanks for all you have done & the success' you have passed along.
It's tough not to respect someone who has simplified investing through logic and calling out the smoke and mirror antics of Wall St and in turn helping the average Joe on the street. Jack Bogle is the John Wayne of investing!
Investors as a group can't obtain alpha. It's mathematically impossible.
MrJre4491 it appears you have no idea how markets work. Go and google Buffett hedge fund bet. Educate thyself.
He is the John Rambo of investing!
He's sharp as a tack!
Such a good guy
A brilliant and humble man! He's done so much for the average investor. RIP Mr. Bogle.
I like how simple he puts it basically, and doesn't care what others think haha Watch those costs!
1:08 I'm pretty conservative (regarding the stock market gains he expects)
1:17 I look at investment return, which is today's dividend yield (which is less than 2% for the S&P 500) and future earnings growth
1:28 Future earnings growth has averaged 5% or 6% (per year), but I'm looking for a lower growth, at 4%
1:35 So I expect 2% dividend yield and 4% earnings growth for a total of 6% yearly return from the fundamentals of the market
1:48 The other part, however, is not investment return, but speculative return
1:54 (Speculative returns deals with) valuations (of companies and how their stock prices get hiked up on the anticipation of higher earnings even though sometimes it hasn't or ever will happen)
3:03 91% correlation between today's yield and the 10-year return of the bond
3:36 3% average (annual?) return on bonds for the coming decade
4:04 in the long run, stocks have given about a 9% (annual?) return and bonds 6%
4:19 What should an investor do (during times of slow stock market growth) ? Save more and watch out for costs (management fees)
5:13 A 75% stocks and 25% bonds portfolio will give you less returns than a 25% stocks and 75% bonds portfolio if your 75% stocks portfolio has to cough up management fees
6:02 long-term inflation rate is about 3.5% (per year)
7:18 stock market returns: 2 elements of investment return (dividends and earnings growth) and 1 element of speculative
R.I.P 🙏
4:30 wise words from a humble man.
I always wanted Jack to say "And that's the rest...of the story.........Good Day". LOL
To anyone who's confused about why he expects below average earnings growth.
Earnings growth over the very long term (a lifetime) is essentially the same as economic growth. Over the next decade, a reasonable expectation is:
2% inflation (companies can generally keep up with inflation by putting their prices up or investing in cost saving)
2% real growth
2% dividends yield
Subtract inflationv for the real total investment return of 4%.
Now for speculation. Speculatice bubbles tend to occur when a baby boom generation retire. The 96-07 bubble was caused by the post WW2 baby boomers retiring. The next baby boom was from 1955-1975 and peaked in 1965, so the peak year when they access their 401k's will be 2025, and will bottom out in 2035. That is probably how long valuations and yields will take to normalise. The CAPE is 30 right now, double the long term average 15. I assume that because of increased market participation, stronger institutions, and index fund growth, market valuations will be higher in this century than the last, at the average of 20 since 1990.
-33% over ~15 years = ~-2% pa speculative return
So the total return you will get is probably 2% on top of inflation.
Wow. Your predictions are playing out quite accurately so far 👏
This is called rational.
He literally knew his shit backwards and forward. Majestic
RIP Mr.Bogle .Thanks for the impactation you have had on my life.
Fiscal Saint! R.I.P, Mr. Bogle.
Great interview, but according to Morningstar, the average actively managed mutual fund doesn't charge 2% anymore. It's actually dropped below 1%. That's not an argument in favor of active management, though, as indexing still clearly beats it on an average after cost basis.
Kraln0r competition at its best. It would need to be negative to return a market return.
Brilliant ..plan and simple. Good man, in a throat cutting field. RIP Mr. Bogle.
Brilliant
Thank you Mr. Bogle wish I knew you better then buffet !!
Good video. With one year FDIC insured yields getting closer to 2% they are looking better compared to a company dividend yield of 2%.
From the UK here. I don't know of any 'Mutual Fund' or Unit Trust that charges an annual fee of 2%. Although, I have seen a small number of Investment Trusts that do. It's most definitely not an average figure and I would say that a 1% fee should be the most that anyone should pay as over the long term it can seriously erode returns as your investment grows in value.
bless this man
As a 25 year old investor, I pray every night that when I wake up in the morning, the headlines will read something along the lines of "Market Crash", or "Market down 30%".
It does not matter, as it will oscillate over time. what matters is that you do not sell during a crash.
Bruce Maddox so true. I rode out the 2008 crash, got a bit nervous but did not panic. Everything turned out fine and I learned one helluva lot 😉. I really felt sorry for those who sold at the bottom. Life savings almost wiped out. There were a lot of gains to be had by people who kept their cool. 👍🏻
I hear ya, my dad bought QQQ at 24.5 at the low of the 2008 09 crash and now it's 180 and he never sells at the maybe 4 or 5 top calls along the way...lol He also did the same thing in 2003 with the Q's at 24 and change.
Getting close to your wish come true
Only 30%? I want that P/E 25 ratio to come down to around 10~15 meaning over 60% market down.
Then we can really enjoy that 7~9% compound interest again. With the P/E ratio going this high, our real return potential on our investing horizon is just so low now. :l
His mind was clearer and sharper at that age with a physical body that was breaking down than my mind is right now. You expect the voice and thoughts coming from that high-mileage body to be feeble and muddled but he sounded quite the opposite.
Are these reasonably expected returns an estimate for the next ten years?
Yep, he gives his expectations decade at a time
His firm manages trillions and almost no advertisement … that speaks lot and clear
God of Investments
When is it going to crash tho
Well it crashed during COVID and came right back.
Well he sure was way too conservative in his estimates for equities so far.
I think everyone was. The facts remain and he was right. Buy and hold index funds.
How about the investment loss based on our desire to eliminate taxes so the rich can make loans from their taxpayer gifts rather than pay taxes to support the government which causes the government to print "quantitative easing" funny money.
long therm investing wont work anymore credit bubble is coming to an end, endless growth is a lie
Company debt and leverage isn't hidden and does not equate to growth in the share price. What point are you trying to make?
If there were to be market crash as a result of less available credit, it would not be the end of long term investing. It would just mean that those who bought shortly before the crash, would probaly have to wait many years before their portfolios catch up to what they would have achieved in the bank.
ok ... but investing on index ... well where is the Genius ? i admire the Kings of return. Those who sistematically beat the indexes. It seems like they see the future. Like prophets ... that is fascinating.
gino there’s very few out there who consistently beat the market. Warren Buffet is an anomaly. The average person isn’t ever going to learn to invest let alone know how to beat the market. Many don’t even know how to start to invest. So the genius in an index fund is the fact that it provides a vehicle for the average individual many whom otherwise wouldn’t even participate in the market to have an opportunity to build future wealth. That average individual is the majority by the way.
The genius is in the simplicity. If you don’t believe it, then look at statistics(dalbar for instance) :)
gino also notice the wisest and best managers have been around a long long time. They have seen a lot in their day. Enough cant be said about that. This is why they are conservative and go their own way. Few ever beat the indexes over time and if they do, its all gobbled up by fees. Indexes aren’t sexy but thats not where wealth comes from.
You need big money to profit like that since there’s no compounding, and if you have big money then there’s no reason to spend 40 hours a week trading
There goes my 'early retirement' plan. I hope this man was wrong