The stock market's rally may be far from over as low interest rates keep valuations in an attractive place, according to Wall Street legend Byron Wien.
"People complain that the market is overvalued but … with these interest rates, the market is really below fair value," Wien, vice chairman of private wealth solutions at Blackstone, told CNBC's "Squawk on the Street" on Wednesday. "It still has some room to move up."
Wien has been on Wall Street for more than 50 years and his annual list of 10 market surprises remains a must-read in the financial industry.
He noted the S&P 500's fair value rested around 18 times next year's earnings, referring to the average's price-earnings ratio. That figure is among the most widely used valuation metrics by investors. FactSet data showed the S&P 500's forward P/E around 17.8.
"At these interest rates, that's not an excessive valuation," he said.
Wien's comments came after the S&P 500 notched yet another record high Wednesday. The index has been on fire since October as optimism around the U.S.-China trade situation increased while the Federal Reserve cut rates for the third time last month. That last reduction brought the Fed's overnight rate to a range between 1.5% and 1.75%. Since Oct. 1, the S&P 500 is up more than 5%.
He also said the U.S. is in a "good situation" as the economy is solid and earnings are "still coming through." But Wien added that lots of investors are still skeptical about the rally as money keeps flowing out of equity mutual funds while hedge funds are not overexposed to stocks.
"With the performance of the market this year, you would have expected some euphoria, but the market does not exhibit euphoria," Wien said. "This is nothing like 2006 or 1999," the years that preceded the financial crisis and the dot-com bubble bursting.