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Benz: Thank you for having me here, and I'm here for the Bogleheads conference. This is an annual event that honors you and your many contributions to the financial services industry. We've been doing these video interviews for several years now. It's kind of a tradition.

One thing I often ask you to talk about, because I think you have a very intuitive way of approaching it, is what you're expecting in terms of market returns for the equity and bond markets in the next decade?

Bogle: It hasn't changed from what we talked about last year very much. But there's a reality to the stock market--let's take that first. The reality is that the fundamental return, the dividend yield plus the earnings growth of companies, drives the long term return of the stock market. The only thing that gets in the way in the short term is a speculative return; are people going to pay more for stocks? Are people going to pay less for a dollar of earnings, in essence?

For example, if the price/earnings multiple were to go from 10 to 20 over a decade, that would be a 100% increase and be 7% added to the return each year, so it can be very substantial. And it also can be negative. If the P/E goes from 20 to 10, minus 7% or roughly 7% a year.

So where are we now?

The dividend yield is about 1.8%, less than 2%. I'm looking for future earnings growth of around 5%. I don't think we can do much better than that; maybe a lot better this year with the tax cut. Maybe a little bit better next year, too. But maybe 5%. So let's call the dividend yield 2, and 5 is 7. By my numbers, that's the investment return, 2% dividend yield, 5% earnings growth. That's a 7% return.

If the price/earnings ratio is to go down a little bit, I think 1.5% off that 7% return, which would be a 5.5% return on stocks over that period. That's a little higher than I've been using--maybe right, maybe wrong. I've usually been using about 4. But that's a ballpark. It doesn't really matter what we guess in these areas. There's no precision in any of this. Let's say in the 4% to 5% range is just for the fun of it, for stocks.

Bonds are a different matter, because there's only one driving factor for bonds in the long run, and that is the current level of interest rates. We use a combination of the 30-year Treasury, which is a little over 3%, and then we use 50% of that and 50% of the corporate rate, which is around 4.25%, and that's going to give you about a 3.8% let's say, but I'd round it to 4 ...