Small investors have waded back into the surging waters of stock markets, Howard Ward, Gamco Investors CIO for Growth Equities, told CNBC on Tuesday, adding that phenomenon was likely to continue.
The rising interest from individual investors have helped advance the rally, Ward said, helped by the impressive earnings growth of key components in the S&P 500 Index.
"The reason is this: If we're expecting earnings on the S&P this year of around $110, if you put a reasonable average multiple on that at 15 times, you get a 1,650" on the index, he explained during a "Squawk Box" interview.
That represents a seven percent move higher from current levels, and would come on top of the eight percent increase seen already on a year-to-date basis.
"That's a reasonable target for year end," he predicted, adding that the estimate could be considered conservative if 2014 earnings fall in the range of "$115 or $120" range.
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As for the Dow Jones Industrial Average, Ward said that the Dow at 16,000 was "very doable" in the next few years. "Stocks are going to be the asset choice for some time," but there will be corrections along the way, he warned.
While the rally might be enticing to many investors, Ward said in certain respects, buyers should beware.
"Do you have to rush into stocks right now if you've missed the 130 percent move that's happened over the last four years? No you don't," Ward said. Still, stocks represent the best of a number of asset options, he added.
"You might get a better entry point, but you won't make any money in bonds — that's my opinion. You obviously won't be making money in cash." He concluded that stocks are going to be the best way for baby boomers to finance their retirement.
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