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Investors Should 'Stay the Course' Amid Global Turmoil: Bogle

Investors ought to "stay the course" despite all the turmoil in Japan and Middle East, though older investors should be more allocated toward bonds, Vanguard Group founder Jack Bogle told CNBC Friday.

A man and his sister stand before their broken house, destroyed by the tsunami at Rikuzentakata in Iwate prefecture on March 17, 2011.
JIJI Press | AFP | Getty Images
A man and his sister stand before their broken house, destroyed by the tsunami at Rikuzentakata in Iwate prefecture on March 17, 2011.

"Be very careful about your asset allocation. I would never get out of the stock market," he said. "Think about your age having something to do with your bond position."

Turmoil in Japan and other parts of the worldwill make for a difficult landscape in the near term, Bogle added.

Still, Bogle said the Japanese economy will rebound and could resemble what happened to the US after the Great Depression.

"In Japan, they will recover from all this. You can argue I think that it's a little bit like what World War II did for the US—called on enormous productive facilities and finally a huge overemployment," he said. "That's what really a lot of people feel brought us out of the Great Depression."

He was less enthusiastic, though, about the Middle East, where tensions in Libya continue to escalate.

The UN Security Council authorized a no-fly zone over the embattled nation and was prepared to enforce the move with warplanes. At the same time, President Moammar Gaddafi announced a cease-fire, though rebel forces doubted his sincerity.

The tension comes after the overthrow of governments in Egypt and Tunisia and demands for more democratic governments throughout the region.

"When you look at the Middle East it's hard say. We love the explosion of democracy over there, but it's hard to see that Egypt is going to be a more stable country," Bogle said.

Also speaking on the Japan issue, Jim McCaughan, CEO of Global Investors, advised more focus more on US and emerging market equities and less on Japan for now.

"I'd be quite wary of Japan until we see how things shake out," he said.

"This cannot be good for Japanese government debt, for they already have debt approaching 200 percent of GDP, the highest for a developed nation. This will make that worse," McCaughan added. "It brings closer the point where the Japanese government finds it hard to fund their deficit. I think that's actually the story on the yen and ultimately rates in Japan."

Though business has resumed, Tokyo after the earthquake is much like New York City after the Sept. 11, 2001 terrorist attacks, McCaughan added.

"It's very reminiscent to me that a week after 9/11 here in New York people were bereaved, they've lost family and friends...family and friends are homeless. It's a really tough situation," he said. "But it's kind of business as usual in Tokyo itself.

"In our office the power didn't even go off after the earthquake happened. The company carried on functioning. We're still trading, we're still talking to clients. We have not gone into disaster recovery."