88-year-old investing icon John "Jack" Bogle, founder of the Vanguard Group, says that the market seems to be "fully valued," and suggests investors adjust their asset allocation.

In an interview with The Street, Bogle said:

"The valuations of stocks are, by my standards, rather high," adding that "my standards, however, are high."

When considering stock valuations, Bogle's method differs from Wall Street's. For his price-to-earnings multiple, Bogle uses the past 12 months of reported earnings by corporations, GAAP earnings, which include "all of the bad stuff," to get a multiple of about 25 or 26 times earnings.

"Wall Street will have none of that," said Bogle. "They look ahead to the earnings for the next 12 months and we don't really know what they are so it's a little gamble."

 

He also noted that Wall Street analysts look at operating earnings, "earnings without all that bad stuff," and come up with a price-to-earnings multiple of something in the range of 17 or 18.

 

"If you believe the way we look at it, much more realistically I think, the P/E is relatively high," Bogle said.

Bogle added that earnings growth in the years ahead might be "as low as 4% or 5%, maybe 6% lower than traditionally and historically."

"I believe strongly that [investors] should be realizing valuations are fairly full, and if they are nervous they could easily sell off a portion of their stocks."

Of course, earnings don't matter at all anyway... for now...

As a reminder, Bogle is not alone in his view that "valuations are high"...

Since Janet Yellen's first warning in July 2014: "Equity market valuations appear stretched"

  • S&P +29%
  • Nasdaq +53%
  • DOW +33%

So much for that warning, and, of course, it would not be Jack Bogle if he didn't conclude that...

"One thing that I strongly urge: Don't ever, ever, ever if you're an investor think of being out of the market or in the market," Bogle said.

Instead, an investor should adjust his or her asset allocation.