Buying stocks and bonds is nothing more than gambling, says famed investor and Vanguard Funds founder John Bogle.

"You're betting on prices. You're betting on buying them from those who don't know how much they're worth and selling them to somebody who thinks they're worth more," Bogle told CNBC.

“That’s speculation and it’s short term,” Bogle says. “It’s influenced and driven by supply and demand, and not by the worth of those companies whose value lies underneath that stock price.”

Instead of buying individual stocks and bonds, Bogle advises investors to recognize the value of diversification and buy a well-diversified fund that charges low fees.

While Bogle believes it’s good that some banks are repaying their TARP loan, he maintains that the Troubled Asset Relief Program failed to meet its purpose of repurchasing troubled assets.

“What the banks got was money to add to their capital,” Bogle says.

“People can disagree the extent to which they’ve actually used it to increase lending. But one thing’s clear — there aren’t repurchases of these troubled toxic assets.”

In its latest report on TARP, the Congressional Oversight Panel said the banks may be in much worse financial shape than the government's stress tests suggest, Time reports.

The reason: The test only focused on loan losses that would occur in 2009 and 2010. Bank losses, particularly in commercial real estate, could be much bigger farther out.

Though TARP was supposed to boost lending, bank lending fell by $150 million, according to the FDIC.