Tags: Baron | Dow | 30000 | 60000

Ron Baron: Dow Will Hit 30,000 in 10 Years, 60,000 in 20 Years

By Dan Weil   |   Tuesday, 09 Jul 2013 08:21 AM

Ron Baron, CEO of money management firm Baron Capital, expects the stock market to return 7 percent a year for the next 20 years, just as it has throughout its history.

Thanks to compounding, that would put the Dow Jones Industrial Average at about 30,000 a decade from now and 60,000 two decades from now, he told CNBC. The Dow closed at 15,225 Monday.

Baron noted that stocks slipped last month after Federal Reserve Chairman Ben Bernanke said the Fed will likely taper its quantitative easing this year if the economy grows as fast as central bank policymakers expect.

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

"Investors are selling aggressively, reacting to news of the Fed's announcement that they might slow their open market bond purchases because the economy is steadily improving," Barons said.

Economic strength makes now a "great time to buy," he said. The central tendency of Fed policymakers' forecasts calls for gross domestic product growth of 2.6 to 3.0 percent this year.

Stock prices also have ground to gain given the profit increases of past years, Baron says.

"Companies have almost doubled their earnings in the past 13 years, while stock prices have increased only about 25 percent," he said.

"This is the beginning, not the end for stocks," Baron added. "You should not be afraid to invest now."

Other experts see positive signs for the stock market too.

"The market is getting comfortable that the economy is strong enough to withstand reduced Fed support," Gary Flam, an investment manager at Bel Air Investment Advisors, told Bloomberg. "The market is inching toward normalcy."

As second-quarter earnings season begins, investors are looking forward to stronger profits in the second half of the year, he said.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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