Buy-and-hold investor Ron Baron: I tripled my normal stock investments during recent wild swings

Key Points
  • Billionaire Ron Baron says he tripled his normal stock investments during the market volatility earlier this month.
  • Financial advisers are always "buying at the wrong time and selling at the wrong time," he argues because they're emotional," he says.
  • Consistency is key, says the founder of Baron Capital, a critic of buying and selling stocks based on headlines.
Billionaire Ron Baron: Volatility can be an advantage for long-term investors

Billionaire investor Ron Baron told CNBC on Tuesday increased his normal stock investing during the market volatility earlier this month.

"In the first week of August, when the market was acting erratic and it had fallen sharply, I tripled the investment that I make every month in the funds that week," the founder of Baron Capital said in a "Squawk Box" interview.

Financial advisers are always "buying at the wrong time and selling at the wrong time because they're emotional, because they read what is happening," he added.

Consistency is key, said Baron, an ardent critic of buying and selling stocks based on headlines.

The market had been rebounding since the Dow Jones Industrial Average fell 800 points, or 3%, last Wednesday, in its worst single-session performance of 2019. But the Dow's three-day winning streak was running into sellers again early Thursday. As of Monday's close, it was down about 2.6% for the month.

Bond yields, while more stable in recently but lower Thursday, were tanking in early August as investors were dumping stocks and buying into the perceived safety of U.S. Treasurys. Globally, bond yields were also plummeting, with debt in many European countries and in Japan trading at negative yields. In fact, Deutsche Bank estimates that about $15 trillion of government bonds worldwide have negative yields.

Baron said the move to negative yields "amazes" him. He marveled at the thought that investors are so risk adverse that they're essentially paying governments to hold their debt, instead of the other way around. Due to their inverse relationship, when bond prices rise their yields decline.

"The reason that is happening is incredible fear," he said. "The reason you have so much fear is that 10 or 11 years ago you've gone through this financial crisis. People still remember. You lost a generation of investors."

Baron, however, remains bullish in the market and the economy. He also predicts faster economic growth due to advancements in technology.

With a net worth of $2.2 billion, according to Forbes, Baron has made a fortune by doing extensive research, buying the stocks of companies he feels are undervalued, and keeping them for an average of about 14 years.

He started Baron Capital in 1982. The investment firm currently has around $30 billion in assets under management.