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The fundamentals of the U.S. stock market have "improved radically" and declines in valuations are overblown, legendary investor and Vanguard Group founder John Bogle said Tuesday.
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CNBC.com John Bogle |
"It seems to me that people have lost sight of the fact that the fundamentals have improved radically," said Bogle, who launched the colossal Vanguard 500 Index in the mid-1970s as a low-cost investment strategy.
"The value of the U.S. stock market was $18 trillion a year ago. And now it's about $9.5 trillion or let's call it $10 trillion with today's rally. Anyone who believes that American business is worth $8 trillion less than it was a year ago I think is a fool," he told Reuters in a telephone interview. (See Bogle's thoughts on the economy and the election of Obama in the video below.)
"Will it be worth a lot less than that and the market is anticipating it is a reasonable question," he added. "Was it somewhat overvalued at the start is an even more reasonable question, one which I would answer in the affirmative.
"So there was some water in the system, some hot air in the system, and we blew it out but I think we have overblown it," he said.
The hard-driving 79-year-old left the Vanguard helm after a 1996 heart transplant, and now often castigates the mutual fund industry as a marketing vehicle run not so much by investment professionals on behalf of investors as by entrepreneurs in search of short-term profits.
A month ago, Bogle told CNBC that the stock market bloodbath was probably more than halfway over.
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