February 8, 2013

John Bogle: Forget Fiscal Cliff, Worry About ‘Nuclear Proliferation’

Legendary manager says cliff ‘will get worked out sooner or later anyway’

John Bogle says it's John Bogle says it's "kind of silly" to sway constantly with the gyrations of the markets. (Photo: Bloomberg)

John Bogle says investors shouldn’t sweat the small stuff. Forget fiscal cliffs, the legendary money manager and indexing pioneer tells The Breakout on Friday, we’ve got bigger fish to fry—like “war, global pandemic and nuclear proliferation.”

In an interview seemed destined to make viewers insomniacs, Bogle, founder of Vanguard, tells the website that, “I think the fiscal cliff, while important, is highly likely to be managed. It's really all going to get worked out sooner or later anyway, so I am pretty confident that that is not the source of our big risk."

The site notes that it’s a statement that's both comforting and leading, “in that it reduces one of the great concerns troubling investors in the short term.”

But it also prompts the question: if that doesn't worry Bogle, what does?

"What I worry about are the known risks that we don't pay much attention to," he says, citing the aforementioned dangers as war, global pandemic and nuclear proliferation.

“As for investors who may be wondering if this is the right time to jump back into stocks, with the Dow and S&P 500 approaching all-time highs, Bogle characteristically urges people to stick with their long-term strategies via his unwavering preference for passively managed index funds,” The Breakout notes. “Almost as a consolation, he says markets would be much riskier right now if they weren't ‘reasonably valued’ but believes, in general, that ‘it's always a time for a little caution.’”

A little cautious? Understated advice for such dire warnings. Bogle then invokes the message he’s always preached.

“When asked to characterize his feelings about the oft-cited ‘risk-on, risk-off’ tone of the markets, Bogle simply says it's '’kind of silly’ to try to make money that way, adding that he's never known anyone who had the capacity to do it successfully for any great period of time,” the website reports.

He concludes by quoting his friend Warren Buffett.

"When the dumb money realizes how dumb it is and buys an index fund, it becomes smarter than the smartest money.”

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