Bogle Says,"Buy"; Schwab Says,"Save"

By Dian Vujovich

Now that it’s clear— for the umpteenth time— that stock prices don’t always soar skywards and market bottoms aren’t identifiable until after they’ve been reached, deciding what to do with your investible cash can be confusing no matter what’s happening on Wall Street.

For those seeking some direction in a market that seems to be caught in a downward spiraling black hole, two of our nation’s best know money-men, John Bogle, founder of Vanguard and Charles Schwab, founder of the brokerage firm bearing his name, offer their points of view.

First Bogle.

Long known for his fees-matter mantra, Bogle pointed out in an interview earlier this month that the market’s fundamentals including the price-to-earnings ratios on stocks have “improved radically” over the past year.

“The value of the U.S. stock market was $18 trillion a year ago, and now it’s about $9.5 trillion,” Bogle said in a Reuters interview. “Anyone who believes that American business is worth $8 trillion less than it was a year ago, I think, is a fool.”

That sounds like a “buy” signal to me.

On the other hand, and there always is at least one other hand, the folks over at Schwab think that saving makes a lot of sense today and have introduced an eight-step savings plan to help investors zero in on just that.

“One of the few benefits in the current environment is that people are focusing more on saving money,” noted Catherine Miller, vice president, investor development at Schwab.

Realizing that most people have limited funds to work with, Miller said that the first thing investors need to do is prioritize between what one’s long- and short-term goals are.

Beyond that, Schwab’s savings ideas include the basics like adding to one’s 401(k), IRAs or other long-term investment vehicles available to them; paying off high-interest rate debt such as those on your credit cards, mortgage or home-equity loans; creating an emergency fund; saving for your kids’ educations; and investing in a diversified risk-managed fund portfolio. Oh, and saving for a house if you don’t already own one.

Nothing new on Schwab’s list but reminders are always a good thing when the market’s immediate future looks murky.