Ron Baron and Nouriel Roubini were guests on CNBC yesterday discussing with Andrew Ross Sorkin the rate at which the stock market will appreciate in the future.
The optimistic Baron, Chairman & CEO of Baron Capital, calculates that GDP plus inflation will drive stocks higher by seven percent a year which translates to a DJIA of 50,000 in 20 years. Roubini, Roubini Global Economics co-founder and chairman, argues that Baron’s rate of growth may have worked in the past, but the rate of appreciation in the future will be significantly lower; in the range of 4.5 percent.
Andy Serwer, Fortune Magazine managing editor, was on hand and expressed his skepticism.
Baron proceeded to provide a couple of stock picks, ITC Holdings (ITC) and Genesee & Wyoming (GWR), along with his rationale for owning them.