The price-to-earnings of stocks and other fundamentals have “improved radically,” John Bogle, founder of Vanguard, told Reuters. “It seems to me that people have lost sight of the fact that the fundamentals have improved radically.”

 

Bogle added: “The value of the U.S. stock market was $18 trillion a year ago, and now it’s about $9.5 trillion, or let’s call it $10 trillion with today’s rally. Anyone who believes that American business is worth $8 trillion less than it was a year ago, I think, is a fool.”

 

That said, Bogle believes stocks were overvalued before the credit crisis hit. “So, there was some hot air in the system,” he continued. “We blew it out, but I think we have overblown it.”

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