US Markets

Jack Bogle: There's no stock picker's market

Bogle: The market is not cheap
VIDEO1:4801:48
Bogle: The market is not cheap

"There is no such thing as a stock picker's market," investment legend Jack Bogle, founder of the Vanguard Group told CNBC on Tuesday.

His comments come as many market experts have been encouraging investments based on stock performance and not market conditions.

Bogle, who previously advised investors to stay the course amid market volatility earlier this year, now tells market watchers that dividends are flat, the market's price-to-earnings ratio is high and returns are less than stellar.

"The market is not cheap. The dividend yields are low, right around two percent; they've been that way for quite a while," he told "Power Lunch" during an interview.

"If you're in the market for the long-term, you have to accept the market's return whatever it may be and so, I look for a decade of returns that are not going to be quite as good or nearly as good as that 12 percent we've earned every year in the last 70 years," he added.

Amid earnings season Bogle warns that the market may see five percent investment return, well below the norms over the next decade, but "it's better than nothing and certainly no reason to get out of the market," he said.

This impulse makes investors sell low and buy high

As for whether bonds are a better buy than equities, the expert says they are "just as bad as stocks in terms of valuations."

Bogle contends that while bonds are rarely worse on a nominal basis, there's not much difference when investors take into account real returns and inflation.

"We investors are funny people," he said. "We'd rather have a five percent return at eight percent inflation, than a two percent return with no inflation, although obviously the latter is the better investment."

Berkshire Hathaway Live Event