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Tags: jack bogle | foreign | stocks | emerging | markets

Jack Bogle Stays Away From 'Undervalued, Riskier' Foreign Stocks

Jack Bogle Stays Away From 'Undervalued, Riskier' Foreign Stocks
Jack Bogle (Courtesy Vanguard)

By    |   Tuesday, 16 October 2018 03:35 PM EDT

Investment guru Jack Bogle doesn’t sink his cash into foreign stocks because he fears that maybe “they're undervalued because they're riskier.”

The Vanguard founder and former CEO told Morningstar that he does truly believe in buying American.

“I'm just a great believer in a U.S. portfolio because we're the most entrepreneurial nation, we've got the soundest institutions, financial and otherwise, or have had in the past, governance is pretty solid, in the past at least, and a well-diversified economy,” Bogle said.

“For U.S. corporations, about half of their revenues and half of their earnings come from abroad anyway. It's not as if we're America first or America only. The entire world economy is integrated around many, many countries trading with many, many other countries. I do not think you need to add international,” he said.

“I don't quite understand where this thing is that you must have a global portfolio,” he said.

“Many of these foreign nations, particularly emerging markets nations are very risky, very interest-rate sensitive, governmentally not as strong or maybe capable of tipping over rather easily. I do tell people, feel free to disagree with me because I'm not always right, but I have 0% in non-U.S. I say you don't need to have non-U.S., but if you do, limit it to 20%. A lot of portfolios now have 25%, 35%, 45% in non-U.S. securities, and I think that's just too much.”

To be sure, Bogle does have his detractors.

JPMorgan Chase & Co. money manager Rashmi Gupta recently told Bloomberg that investors need to put contagion concerns aside and start looking for bargains among emerging-market stocks.

"Right now there’s so much fear and negative sentiment that people are not distinguishing opportunities at a granular level," said Gupta, who runs J.P. Morgan Private Bank’s $700 million Emerging Markets Growth & Income Strategy from New York. "You’re not getting enough people drilling down to individual sectors and countries and finding the right opportunities."

The comments come after emerging-market equities tumbled 17 percent this year as currencies from Argentina to Turkey cratered and trade tumult between the U.S. and nations from China to Mexico stoked uneasiness in emerging-market investors. Gupta’s top picks include Brazil, Russia and Mexico, with part of her approach based on a simple strategy -- checking out who’s in charge of a country’s monetary policy.

Find out "whether they’re independent, prudent and engaged in the right monetary policy," Gupta said. "If you had that lens, you would have been cautious on a place like Turkey."

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InvestingAnalysis
Investment guru Jack Bogle doesn’t sink his cash into foreign stocks because he fears that maybe “they're undervalued because they're riskier.”
jack bogle, foreign, stocks, emerging, markets
419
2018-35-16
Tuesday, 16 October 2018 03:35 PM
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