That’s not my prediction, that Ron Baron’s prediction. Ron is a billionaire mutual fund manager and investor. He is the founder of Baron Capital, an investment management firm which manages approximately $26 billion in assets under management.
The son of an engineer (dad) and purchasing agent (mom) for the federal government, Baron wanted to be a doctor but didn't get into medical school. So in 1970, Baron became a securities analyst in 1970 and named his dog Big Mac after one of his first successful stock recommendations.
In 1982 Baron founded Baron Capital Management. Baron Capital deploys a long-term strategy of holding stocks anywhere from 5 to 15 yrs. His buy and hold strategy works as there are estimates out there that he has generated $23.5 billion in investment profits since 1982.
Ron Baron his biggest mistake was not investing in Jeff Bezos’ Amazon back in 1999 when he was trying to convince Jeff to invest in Sotheby’s.
Ron made some noise last year when he said the stock market will double in 10 years. In order to do that the stock market must return about 7% / yr. Ron is definitely on an island by himself as most of the investment community is expecting below-average returns over the next 10 years. But hey, one makes money in the markets by going against the herd.
However, I think Ron’s boldest prediction was this week when he said he thinks the DOW will be at 650, 000 in 50 yrs.
Buy-and-hold billionaire Ron Baron told CNBC on Friday “fear is evident” in the stock market, but that should not deter people from investing in stocks.
Speaking from his annual investment conference in New York, Baron predicted the Dow Jones Industrial Average, based on historical moves over decades, will reach 650,000 in 50 years, with an over $500 trillion U.S. economy.
“Everybody is worried about something,” Baron said on “Squawk Box.” “If you invested in 1969, amidst turmoil in 1969, you would have make 25 times your money.”
“I think the 6.5% annual growth [in the market] is going to continue, on average, for the next 50 years, at least,” he added, making the point that investors should forget the day-to-day market gyrations and stay focused on the long term.
“The economy then was $850 billion. It’s now $21.3 trillion. That’s up 25 times,” he said. “All you had to do was believe that this country was going to survive and invest then and you would have made 25 times your money.”
“I’m thinking the next 50 years is going to be similar to the last 50 years. That would be 25 times your money if you invest now,” he said, adding that currently “extraordinarily” low interest rates provide even more incentive to invest.
If Ron is going to be right, the DOW must get pass the potential triple top that is setting up.
A triple top patterns is one of many reversal patterns out there. The premise is buyers are getting exhausted while sellers are starting to become a bit more aggressive. If the third top or attempt to make new highs fail, the sellers start to smell blood and push price lower.
So what do you think, will the DOW make new highs or will this be the start of the longer term downtrend?
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
