Ron Baron: We Invest In Growth Stocks For The Long Term

Ron Baron, CEO, CIO and portfolio manager for Baron Capital, joins “Squawk Box” to discuss big topics such as Tesla Inc (NASDAQ:TSLA), the economy, long-term investment strategy, how to invest in growth stocks how market volatility can be an advantage and more.

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Transcript

Let's get to our newsmaker of the morning Ron Baron, CEO, CIO and Portfolio Manager for Baron Capital who is out in the Hamptons right now Ron, it's great to see you.

Hi, Bex. How are you? Good. I you know, Joe. Hi, Andrew. Good to see you run.

I'm guessing that you are where a lot of people from Wall Street are these days hanging out on vacation somewhere away. But I'm also guessing that you're watching the markets very closely given what's been happening all the volatility. What do you think of what we've seen over the last week or two, the moves in the bond markets what that means for stocks.

I am not watching as carefully as you would think I would, most people do. To just a background for my business for a moment is that we manage $30 billion, and we've made we had 100 million dollars under management 1992. And we made 28 billion in profit since then, and we've beaten the markets, from inception for all for 98% of our funds. And we're in the top 6% for 61% of our funds. So basically, we have a very, very strong track record.

And we're long term invest in growth allocators and what you read about now or what you hear about now and listen to every day on the news, or events that disturb most people, worry most people. So, so whether it's what's happening in Hong Kong, whether it's interest rates, whether it's the Fed, whether it's oil prices, whether it's Brexit, whether it's what's happening in Europe, what's happening in China trade wars, so everyone is worried about about these events.

I thought one thing was sort of interesting to me. And last couple of days that the President has announced that he had an interest in purchasing Greenland. And what that reminded me of is that, that the, we bought the Louisiana Purchase, which was one third of the country for $13 million, 13 million in 19 1807. That works at two three cents an acre and then we had something the sewers Valley board. Alaska I think was 1860s. And that was something like $17 million.

And so so the president is a real estate guy. And so he understands real estate values, obviously, maybe he has this in his mind. But one thing that was really interesting to me about this is that the green land is owned by Denmark, and one of my really good friends with the ambassador to Denmark for George W. Bush, in the 1980s.

His name is Stuart Bernstein. And I used to tease him all the time about Stuart, you know, congratulations and amazing job you've done as ambassador, you've kept us out of war with Denmark. And so he would smile, but maybe we need Stewart to come back just in case things get a little rough. So so by bottom line, is that that will you think about all the developments that are taking place and everyone is worried about him. It doesn't mean a lot in the long term.

And what we think about is that the government so one of the things that is amazing to me, is that that people are lending government's money with negative interest, $17 trillion is knocked out and people are going to get back less than they paid less than they've given.

And when you think about that, the government, they're lending it to governments and the government's have said, we are going to make your money worth less. So governments are devaluing their currency against things, and you're giving them money, and you're not going to get back for an extended period of time, and not going to make any money on that make making less. And the reason that that's happening, I think, is incredible fear.

And the reason you have so much fear, Is it 10 or 11 years ago, you've gone through this terrible financial crisis. And so people still remember you've lost a generation of investors just like you did after 7374, just like you did in the 1930s. So you lost a whole bunch of people that will never invest the end. I was listening to Jeff trout us out this morning.

And he said that his daddy told him that what is really interest you know, he should never worry about good things happen to two companies that are really cheap that stocks that are really cheap. Now my parents they never were able to invest in growth stocks, but if they had, and they wouldn't have known what a growth stock was their value stock was.

But they would have said if my dad learned about it. He said when he said, Well, good things happen to growth stocks, we invest in growth stocks for the long term. And don't worry that all these things that everyone that you read about or you hear on TV every day, run a script performance.

I appreciate your long term view. But for investors who maybe don't have the same time frame as you, would you tell them that they would be foolish or they were foolish, if they were selling last week and an 800 pound point decline for the Dow would you be telling them, you know, stay the course. Don't worry about everything that everyone's worried about all around you.

I would be telling them that and in fact, so my family and I are now you know, I had a negative net worth in 1970. And we're now the largest investors in our mutual funds, and I invest in growth stocks every so even after that's the case, I still invest every single month and in the first week of August, when the market..



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver