Vanguard founder John Bogle says there's a good chance the consumer could lead the U.S. into a recession. "I think there's a 75% chance of a recession," Bogle told me this morning. Bogle, the former chairman and founder of Vanguard, is one of those sage market veterans you just want to hear from when the market is unsettled.
I caught up with him as he left the set of "Squawk Box" today where he jokes he upset Joe Kernen with his negative talk. He says the decline in consumer confidence is a bad sign. The consumer, he says, has been hit hard by the troubled housing market and is no longer able to raise spending money from the equity in his home.
So, if that's the case, what about investing?
Bogle is in for the long term. "A diversified investor with a bond position should just ride it out. In the long run, I think a bond position and the growth of American business will bail you out," he told "Squawk Box."
"What do I say to the speculator? Well, I would say to the speculator: I'm nervous. I might even say, 'get out'" he said. Bogle also talked about the high amount of volatility in the market and the fact that the credit crises has hurt investors confidence.
"We're working on volatility levels in the market in a simple sense that's totally without precedent in the whole history of the stock market," he said. "It used to be when I came into this business and for decades there after maybe 3 or 4 days a year you get a move in the market up or down 2 percent...In the last 12 months, we've had 14 of them , five up and nine down two percent moves."
"It's without precedent...No matter what the past data shows you anything can happen in the securities market," he said. And Bogle made a parting comment as he left CNBC today. He told me to quote him accurately if I were to quote him. But then he adds with a smile, "If you don't quote me accurately, I won't care much about it." Now that's someone whose comfortable in his own skin.
FYI: The video clip here is of Bogle discussing whether John Thain will restore confidence in the Merrill Lynch.
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