Street Signs

Legg Mason Chairman: Higher Stock Prices in '07

Not sure what to do with your money right now? On today’s “Street Signs” CNBC’s Erin Burnett  asked someone who has nearly $1 trillion in assets. In a rare interview - Chip Mason, the Chairman, CEO and Co-Founder of Legg Mason , offered his advice.

Mason said, "In my view most things are inline for higher market prices next year. Of course, energy is a factor – but we don’t expect energy to play the (negative) role it played last year. So that bodes well for the stock market and the bond market."

"I do think we’ll see 14,000 on the Dow next year. I don’t think the Fed will make strong moves – but I think the next move is a cut. I don’t feel inflationary pressure will move in the wrong direction in the Fed’s standpoint."

"I think that the Fed will ease (interest rates) sometime in 2007 – maybe June or July. And it could be as many as 3 times. "

With such an optimistic outlook, Erin Burnett asked "What area are you most worried about?"

Mason replied, "I’m worried about a pullback – we haven’t really had a pull back.  There’s concern that there could be some pull back just to re-clarify and re-set the market because we’ve gone up a lot. And I always worry about inflation and oil – two things that always have a negative impact."