On June 20, a day when investors were heading for the hills and the market was down sharply, Ron Baron's Baron Capital saw its strongest inflows of the year.
The markets plunged that day after Federal Reserve Chairman Ben Bernanke indicated the central bank was getting ready to exit its extreme monetary easing program.
When asked about the recent equity market sell-off that accompanied Fed
fears, the renowned buy-and-hold investor stressed buying and selling
on news is not a good strategy.
(Read More: One Eye on Earnings, the Other on Bonds ) "Money is running from bonds and gold. I think people investing in bonds can have significant capital depreciation over the next several years," he said in an interview.
"Everyone thinks they are advantaged by trading on news. They are not.
This is why the average investor in mutual funds makes 3 percent per
year while the average mutual fund earns 7 percent per year." Baron
added.
"Investors who base their buy and sell decisions on
current news generally sell and buy at exactly the wrong times. It's
crazy," he continued."Companies have almost doubled their earnings in the past 13 years while stock prices have increased only about 25 percent," he said.
Expecting stock market returns for the next 20 years to approximate the 7 percent annual returns earned by U.S. stocks for generations, Baron quoted Albert Einstein that "the most powerful force in the universe is compound interest."
He said in his opinion based on the compounding effect, "the Dow Jones will be 30,000 in 10 years, 60,000 in 20 years."
Baron is putting his money behind his words. 
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