Jack Bogle bashes ‘FANG’ investing, says this trading mentality is a ‘loser’s game
Vanguard founder and former CEO Jack Bogle tells CNBC that “anything that gets investors into trading is a negative.”
“Trading is a loser’s game. Trading is short-term speculation,” he says.
Vanguard founder and former CEO Jack Bogle is not a believer in trading ‘FANG’ stocks.
When asked about Intercontinental Exchange launching a FANG+ index futures contract for traders on Wednesday, Bogle blasted the idea.
The product enables investors to trade an index that tracks the performance of Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet, along with Alibaba, Baidu, Nvidia, Tesla and Twitter.
“If you want to do such a crazy thing, it certainly makes it easy to do. … I have no doubt it’s a liability,” Bogle said on CNBC’s “Power Lunch” Tuesday. “I think the odds are very bad. It appeals to the trading instincts in investors. … If you like gambling, if you like casinos, these things are really, really, really good.”
Instead he recommended investors focus on the long term with a multidecade time horizon by buying index funds that minimize trading transaction costs.
“Anything that gets investors into trading is a negative,” he said. “Trading is a loser’s game. Trading is short term speculation.”
Bogle founded Vanguard Group in 1975. The firm is widely regarded as the leader of passive index investing. It has approximately $4.7 trillion in assets under management, according to its president.
What Are FANG Stocks and Why Does Jim Cramer Love Them?
When most people hear the word fang, they think of Dracula. This story isn’t about the living dead, it’s about stocks — Facebook, Amazon, Netflix and Google.
t’s about stocks — and some really good investments.
FANG, an acronym created by TheStreet’s Jim Cramer a few years ago, is representative of four of the most popular and best-performing tech stocks in recent memory — Facebook (FB – Get Report), Amazon (AMZN – Get Report), Netflix (NFLX – Get Report) and Google (GOOG – Get Report) (GOOGL).
Three of the four companies, Amazon, Netflix and Google have recently reported second-quarter results that have been more than well received by investors. Following earnings, shares of Netflix and Google rose 18% and 16%, respectively. Amazon shares are set to open 21% higher on Friday, after the company posted better-than-expected second-quarter results.
Netflix is in the midst of global expansion, adding subscribers at a breakneck speed, as it seeks to become the preeminent subscription-service content company on the planet, challenging the dominance of Time Warner’s (TWX – Get Report) HBO.
Google, on the other hand, has had some difficulties in recent quarters, with perception that the core business was slowing and it was having difficulty making money with mobile.
New CFO Ruth Porat, former chief of Morgan Stanley (MS – Get Report), laid out a clear plan to investors that was well-received, highlighting the fact that Google was going to rein in costs. Omid Kordestani, Google’s chief business officer, highlighted the increased usage of YouTube, particularly on mobile, amid fears people were leaving to watch videos elsewhere.
Amazon has demonstrated that its business model, which is to continuously expand into new areas for the sake of short-term profits, is paying off.