Despite hovering around record highs, stocks are "cheap on stock valuations alone," said billionaire buy-and-hold investor Ron Baron in a CNBC interview on Friday from his annual investment conference in New York City.
To make his case, Baron provided a history lesson: "From 1999 to now, companies earnings have about doubled. And the stock market is up 20 or 30 percent. From 2007, it's up maybe 10 percent. People say how much it's up, but it's only up from where it crashed."
As for valuations, he said on "Squawk Box" that at the height of the Internet bubble "in 1999 the stock market was selling for 33 times earnings." Stocks are now selling for around 14 times, he said. "They're cheap on stock valuations alone."
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The Baron Capital chairman and CEO formed the investment company that bears his name in 1982. It currently has $23.8 billion in assets under management. The family of Baron funds have all returned at least double-digit gains in the past five years.
Being a long-term investor, Baron said he doesn't pay much attention to speculation over when the U.S. Federal Reserve might taper it's $85-billion-a-month bond-buying and its impact on inflating stock prices.
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"The Federal Reserve is obviously going to some day stop doing that. I guess maybe it's not even obvious they will. I presume that they will," he said, adding that interest rates—which the Fed plans to keep near zero for the foreseeable future—are also "so far below where they normally are."
Baron observed that the central bank is in a tough spot: "The economy has too much leverage, and they still have to make it worth less and make it more affordable."
But if the Fed were to increase interest rates right now "it would be a big penalty to growth and the economy," Baron said.
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—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.
