Billionaire investor and the founder of Baron Capital, Ronald S. Baron acknowledged how “unsettled” investors were amid the ongoing market correction and highlighted the inexpensive stocks on Tuesday.
What Happened: The Tesla Inc. TSLA bull, popularly known as Ron Baron, appeared on CNBC’s Squawk Box on Tuesday morning and said that “Most people are very unsettled” because all the things are happening so quickly.
This comes after the Nasdaq 100 index plummeted 12.46% from its previous high of 22,222.61 to 19,430.95 points on Monday. Whereas the S&P 500 index neared the correction zone, down 8.67% from its 52-week high of 6,147.43 to 5,614.56 points.
“The stock prices, I have been saying for a while now, can’t believe how cheap they are,” said Baron.
Baron believed that the current volatility was “intentional,” and the current administration led by President Donald Trump was taking measures to slow the economy down and get “inflation out of the way”.
“They must be doing this now so in 1.5 years you could get it out of the way,” he added.
Talking about his investment in Elon Musk‘s Tesla which has declined by 41.43% on a year-to-date basis, Baron said, “I thought we could make four times over the next 10 years, but we can make more than that at these prices.” He also highlighted that he expects 10x growth in SpaceX over the next 10 years while Musk pegs it at 30x.
Why It Matters: The Nasdaq 100, having entered correction last week, dropped 3.81% on Monday, validating a trend identified by Jason Goepfert. He stated that historically, a 3.5%+ decline after a correction and 200-day average breach triggered a bear market, confirming a “bad scenario” for bulls.
Contrary to bear market fears, Edward Jones’ Mona Mahajan reassured investors that Monday’s selloff was a normal pullback, not a confirmed bear market, citing historical data and a lack of recession.
“Keep in mind that in any given year, one to three pullbacks are normal, in the 5% to 15% range, and historically these have led to buying opportunities,” she said in her note.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Tuesday. The SPY was up 0.46% to $563.17, and the QQQ also advanced 0.63% to $475.73, according to Benzinga Pro data.
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