Against my better judgement I caught a little bit of CNBC this morning. But to my surprise they had Ron Baron on for an extended interview. Imagine a financial network speaking to an investor who invests based on how the stock market values a business in relation to how that business is going to perform over the next five years!
Baron covered what I think are a couple of interesting points.
He suggested that after almost 11 years of stock markets going nowhere we are setting up for a run similar to what we had from the early 80s through 2000. He compared the current situation to the period from 1967 to 1980 when the Dow went exactly nowhere.
Baron made the point of how earnings for S&P companies had doubled over the past 10 years while stock prices have not increased.
His second point was that high frequency trading which has been blamed for much of the recent volatility offers a great opportunity for investors. How can it not be when an investor is interested in the five or ten year prospects for a business and the high frequency trader is worried about the next nano-second. How can stocks not become seriously mispriced when high frequency trading accounts for a large percentage of trading volume?
A good example might be ATP Oil and Gas. It started August at $14. Within two weeks it was down as low as $6. And today it is back to almost $12. Ridiculous for a company that hasn’t changed during a span of a couple of weeks.
Here is the video of Baron. I thought he did well answering some fairly silly questions:
Baron covered what I think are a couple of interesting points.
He suggested that after almost 11 years of stock markets going nowhere we are setting up for a run similar to what we had from the early 80s through 2000. He compared the current situation to the period from 1967 to 1980 when the Dow went exactly nowhere.
Baron made the point of how earnings for S&P companies had doubled over the past 10 years while stock prices have not increased.
His second point was that high frequency trading which has been blamed for much of the recent volatility offers a great opportunity for investors. How can it not be when an investor is interested in the five or ten year prospects for a business and the high frequency trader is worried about the next nano-second. How can stocks not become seriously mispriced when high frequency trading accounts for a large percentage of trading volume?
A good example might be ATP Oil and Gas. It started August at $14. Within two weeks it was down as low as $6. And today it is back to almost $12. Ridiculous for a company that hasn’t changed during a span of a couple of weeks.
Here is the video of Baron. I thought he did well answering some fairly silly questions:
