The 25-year Vanguard veteran’s outlook contradicts the prevailing position advanced by the big banks, research firms, and TV pundits that despite serial years of big gains, U.S. stocks remain a great buy. That bull case rests mainly on optimism that the Big Beautiful Bill’s deregulatory agenda and tax cuts will spur the economy, and that the AI revolution promises a new world of efficiencies that will shift earnings to super-fast track going forward. The powerful momentum that has driven the Nasdaq and S&P 500 to all time highs this week bolster their argument for more to come.
Davis follows the Vanguard mindset that, arguably more than any other, revolutionized the investing world over the past half-century. The company’s founder, John Bogle, created the first index funds for ordinary investors in 1975, following the conviction that funds choosing individual stocks regularly fail to beat their benchmarks after fees, and that a pallet of diversified index funds, and later ETFs, that hold expenses to an absolute minimum, provide the best platform for achieving superior gains over the long-term.
The top testament to the enduring validity of the Vanguard model: Over 80% of its ETFs and indexed mutual fund beat their peer-group averages over the past 10 years, measured by LSEG Lipper, largely courtesy of those super-tight expense ratios. The Vanguard model’s won such overwhelming favor that it now manages 28% of the combined U.S. mutual fund and ETF universe, and it’s gained 7 points in market share in the past decade. At $10 trillion in AUM, it ranks second only to BlackRock among all U.S. asset managers.
