you know, jack bogle's logic speaks to the market not being able to outperform itself.true. index funds do better than the average mutual fund and the average fixed income investor. you know, what the exception is why i'm at liberty to talk about this is jack bogle himself a few weeks ago said there was the pi pimco exception. i thought he meant pimco has been able to beat vanguard. we're on the same team in terms of admiration, but certainly in terms of performance, pimco still wins out. >> bill, the signal is important to a lot of people. are you saying you don't think can you understand the market in the same way because of the fed's involvement to be able to time it the way you have in the past? >> no, i don't think so. as a matter of fact, pimco's strategy is based explicitly on timing what the fed is going to do. we think, for instance, janet yellen's fed is going to be focused on exiting qe, tapering and exiting and initiating forward guidance policy which encourages bond investors like pimco to take its place. why would an investor do that? only if janet yellen

vanguard's jack bogle joins us now to weigh in. u're taking a victory lap here for the passive investing view. >> i've been around too long to take victory laps. times change. >> bill knows that. >> you taught me well. >> victory laps a little arrogant for me. i'm content with what we're doing here in 20 13. obviously content with the way the index funds have performed. but they're not doing -- we're not creating any miracles here. all we're doing is giving you your fair share of the market return. and that's what all investors as a group are doing. active money managers except they take such a huge hunk out of it. as a group, they cannot win. >> mr. b. what do you say to those -- i'm lobbing you a softball but an important point to make. when they say the world is too complicated with all the different trading mechanisms that are out there, the high speed trading, the computerized trading and so forth, the buy and hold strategy doesn't work anymore and certainly you don't want to go with index investing. you need to be paying more

. >> rick santelli, jack bogle was talking to kelly yesterday. said he believed the taper was already priced in to both stock and bond markets. i'm wondering what you think, rick, as to whether any of it is priced in anywhere. >> i would say no. i hate to disagree with such an icon but my opinion is no. as a matter of fact, our last guest has it nailed. since 1979 when i first had a membership at cme, i've been through a lot of cycles, tightening and easing. what we're going through now due to qe, if you go to last fed meeting, interest rates have moved higher. look at s&p 500 in that same time period. doesn't look like it's priced in to me. i'm so glad you brought up that steve liesman sounds convinced and he does have good sources. makes me a little nervous. but i don't like to have a guide walking me through what the fed will or won't do. i like it to be apparent if anybody does their homework, which is exactly what the problem is. it's not a question of transparency. it's a question of what are they going to do next? have they decided? how ca