Dow Should Hit 30,000 in 10 Years: Baron
The Dow Jones Industrial Average — now hovering around five-year highs on either side of the 14,000 level — is going reach 30,000 in the next decade, buy-and-hold investor Ron Baron told CNBC on Tuesday.
Baron, chairman and CEO of Baron Capital, said in a "Squawk Box" interview that he ignores stock market moves in the short-term. "So I don't think about 14 to 15,000 … I think of stocks being a great inflation hedge."
In a further explanation of his investment philosophy, Baron said, "Over the long term, I think the stock market is going to grow 7 percent a year," about the same rate as the overall economy, not adjusting for inflation. He said that this has been the norm for generations and he doesn't see that changing.
"So people are saying … '[Dow] 14,000, is it too late?' It's not too late; 14,000, I'm thinking in 10 years, it's going to be 30,000. In 20 years, it's going to be 50,000 or 60,000."
Baron said he has a 13 percent turnover a year in his biggest fund, which has $6.2 billion in assets under management. "That means I own stocks an average of seven years. … What I'm really interested in, not so much the stock market, I'm interested in companies. I'm an investor."
"Carlyle group came out and it was an ice cold deal," Baron recalled. "In fact, the stock went from $22 to $21 [a share] and in that period of time we bought 4.5 million shares … and now the stock is $31."
Because of his familiarity with financial firms, he said, he bough Carlyle thinking it was undervalued.
He said he also believed the worldwide brand of the iconic U.K. soccer club Manchester United, valued at less than $2 billion, was low — considering the Los Angeles Dodgers baseball team in the U.S. had sold for more.
"[George] Soros — unbeknownst to us — and we were the two major buyers [of Man U stock] between $14 and $12," Baron said. "I think we bought somewhere around 4 million shares. And now the stock is $16 or $17."
During Tuesday's "Squawk Box" interview, Baron also showed off a lighter side, saying, "I don't believe so much in the predictions of economists. And on the other hand, I do believe in predictions of fortune cookies."
He then pulled out a fortune he said he got a few days ago and read it out loud, "All the effort you're making will ultimately pay off."
"That's what I believe in," he beamed.
—By CNBC's Matthew J. Belvedere; Follow him on Twitter