<http://schema.org/articleBody>
"No matter where you look lately, the news certainly doesn&amp;#8217;t inspire confidence in a bright future for stocks. Gas prices continue to climb, threatening to sap consumer spending. Europe&amp;#8217;s debt crisis is bubbling over again. The Fukushima nuclear plant in Japan is still leaking radiation. And back here at home, Standard &amp;amp; Poor&amp;#8217;s is warning it will cut the nation&amp;#8217;s debt rating if we don&amp;#8217;t get our profligate ways under control. It&amp;#8217;s enough to send investors flocking to gold, pushing prices to record levels.\nAdd to that the stock market&amp;#8217;s rapid recovery from the dark days of 2008, and you begin to understand why so many people are bearish on equities. Yet some of the smartest investors &amp;#8212; who have made billions of dollars over the decades &amp;#8212; say that stocks are still the best place to park your money for the foreseeable future.\n&amp;#8220;The stock market is setting up like a springboard right now,&amp;#8221; says Ron Baron, a self-made investor who started with nothing and now has $19.5 billion in assets under management. Baron started his fund in 1982, at the beginning of a 17-year bull market. He thinks the analysts and investors who work for him have the same opportunity to find incredible bargains in stocks that he had back then. &amp;#8220;I tell them it&amp;#8217;s not inconceivable that their money is going to increase eightfold in about 25 years,&amp;#8221; he says.\nHis logic is simple. In the past 12 years the market has gained only about 20%. But earnings power for the companies in the S&amp;amp;P 500 \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tSPX\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t &amp;#8212;  the amount those corporations are expected to earn for the year &amp;#8212; has skyrocketed, rising from $44 a share to $95. Simple math tells him that valuations are half what they should be, and that adds up to a bargain in Baron&amp;#8217;s view. Baron thinks inflation, the enemy of cash and bonds, is on the rise. It affects consumers (&amp;#8220;When I started driving, a new car cost $3,000 to $4,000; now it&amp;#8217;s 10 times that,&amp;#8221; he says), and it can be deadly for certain investors. &amp;#8220;If you had your money in cash starting in 1958, you lost 4% of your investment each year because of inflation &amp;#8212; that&amp;#8217;s 90% of your investment gone over 50 years,&amp;#8221; he says. &amp;#8220;But if you invested in stocks, you made 25 times your money, and I think the same thing is going to happen again.&amp;#8221;\nHe&amp;#8217;s not the only billionaire investor who&amp;#8217;s betting on stocks. Lee Cooperman, the founder and chairman of Omega Advisors, also says equities are cheap compared with other asset classes and relative to history: They trade at 13.5 times earnings estimates for this year, compared with historical levels of 15 times earnings projections. &amp;#8220;By default, stocks are the best house in the neighborhood, and if all goes well, it could be a really great neighborhood,&amp;#8221; he says.\nRather than follow all the negative headlines, Cooperman rattles off a list of business leaders he listens to instead: &amp;#8220;The CEO of Caterpillar \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tCAT\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t says business is improving outside the U.S., [General Electric \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGE\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t chairman and CEO Jeff] Immelt says business is getting better every day, [Berkshire Hathaway \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tbrk.a\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t chairman and CEO Warren] Buffett says business is steadily improving.&amp;#8221;\nCooperman spent 25 years at Goldman Sachs \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tGS\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t before breaking off on his own and starting hedge fund Omega Advisors, which now has about $6.1 billion in assets under management. Over the years he has succeeded by zigging when others zag. That&amp;#8217;s another reason he likes stocks: So many others don&amp;#8217;t. &amp;#8220;Market players are still conservative; the public is still scared,&amp;#8221; he says, adding that investors have shied away from the stock market since 2006. Over that time pension fund holdings have dropped from 65% in stocks to just 50%, and households have cut stock holdings from 25% to 21% of their financial assets. &amp;#8220;That&amp;#8217;s a plus,&amp;#8221; says Cooperman.\nThe general discomfort with stocks also makes Baron feel more comfortable in his convictions. He remembers a 1979 article in Business Week titled &amp;#8220;The Death of Equities.&amp;#8221; He was reading a book his uncle had given him by stock market contrarian and showman Joe Granville. &amp;#8220;It opened my eyes that you&amp;#8217;re supposed to buy stocks when news is really bad and sell when everything is really good,&amp;#8221; says Baron.\nAnd if he saw a cover story today predicting the end of equities? &amp;#8220;It would just make me feel better,&amp;#8221; says Baron. &amp;#8220;People always think the wrong thing at the wrong time.&amp;#8221;"^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2011/05/11/stocks-still-rule/>