Return on equity should double in the next decade to around 7 percent, Vanguard Group founder Jack Bogle told CNBC Monday.
Dividend yields average a little over 2 percent, he explained. "We know corporate earnings grow at the rate of America, the rate of our (gross domestic product)," which he sees at 5 percent by decade's end. That would make for a 7 percent return on stocks, which he called a "reasonable expectation."
"That would mean you’ve doubled your money in the decade," he said.
"What I try to point out to people is the stock market moves in cycles. We had this great cycle in the 1980s, this great cycle in the 1990s, this terrible cycle in the first decade of century and on average for the three of them, it was a rather normal level, maybe a little bit above that, of 9 percent," he pointed out. "So we can’t get too deep into the problems of the single decade when it's kind of a makeup decade for those two insane decades that went before."
As for price/earnings multiples by the end of the decade, "that’s the other unknown. But as I look at it, the P/E ratio…long-term norm is about 17, and now it’s around 20."