×

Warren Buffett’s hero says Trump’s growth target would be impossible to achieve

Jack Bogle, a hero of Warren Buffett and a lifetime Republican, has told the BBC that President Donald Trump's plan to grow the U.S. economy by 4 percent a year is probably "not even possible for anybody."

The founder and retired CEO of The Vanguard Group critiqued several strands of Trump's policy mix during a wide-ranging BBC interview this week. Most notably, he said the president's campaign promise for the American economy seemed fanciful.

Jack Bogle
Mark Lennihan | AP
Jack Bogle

"Anybody that wants to make the U.S. economy grow at 4 percent a year in real terms has a big job to do. I don't think it's even possible for anybody," Bogle said.

He also said administration rhetoric over regulation was a concern.

"I think reducing regulations is a reasonable thing to do if you do it the right way, but eliminating regulations is some sort of madness."

And highlighting that he himself is the child of an immigrant, Bogle questioned the trade and border policies emanating from the White House.

"I think increasing trade barriers is the wrong way to go for business," he said.

"And I'm not making a political statement here, the economics of cutting back on immigration is extremely harmful in the long run for our economy."

Bogle was born in 1929, the same year as the Wall Street crash, and continues to invest after 65 years in the business.

President Donald Trump arrives to speak aboard the pre-commissioned USS Gerald R. Ford aircraft carrier in Newport News, Virginia, March 2, 2017.
Saul Loeb | AFP | Getty Images
President Donald Trump arrives to speak aboard the pre-commissioned USS Gerald R. Ford aircraft carrier in Newport News, Virginia, March 2, 2017.

He is famous for introducing low-cost passive funds and was described by Warren Buffett in a recent letter to shareholders as a hero.

In the BBC interview, Bogle said Buffett was merely recognizing his assertion that Wall Street needed to be fairer to investors.

"Over an investment lifetime, a dollar invested compounded 7 percent over 50 years grows to $30 in the stock market, and it grows to $10 in a mutual fund," he said.

"So it means that an investor who put up 100 percent of the capital, puts up 100 percent of the risk but got 30 percent of the return."

"Wall Street put up none of the capital, none of the risk and got 70 percent of the return," he added.

Bogle said that unfairness was presently being addressed through the growth of index funds.

Meanwhile, Trump was not the only boss in the firing line of the legendary investor. Bogle said remuneration for CEO's stock options could be too generous and it was time to change the measurement of success.

"I think remuneration ought to be not on the price of the stock but on the return on the investment made by the corporation," he concluded.