NEW YORK ( TheStreet) -- On Monday, the CNBC "Fast Money Halftime Report" traders sat down with famed investor Leon Cooperman at the Ira Sohn Conference in New York City. Cooperman, who is the chairman and CEO of Omega Advisors, said stocks are fairly to fully valued at current levels. The broader market trades at 16.5 times earnings, which is neither cheap or expensive. If rates stay low for an extended period of time, then stocks are undervalued.
Yet Cooperman said he expects the Federal Reserve to raise interest rates in September or December. But that shouldn't stop stocks from continuing to rally. "I fail to see the significance," he said about the rate hike. It would be a more bearish sign if the Fed didn't raise rates, as it would suggest that the economy isn't doing well.
Historically speaking, the stock market doesn't peak for 30 months following the first rate hike. On average, stocks are higher by 9.5% one year after the first rate hike in a rising rate environment, Cooperman added.
If anything, Cooperman said, the bond market is what's overvalued, not stocks. Including dividends, he expects the S&P 500 to climb 7% to 8% for the year, to about 2,200. He said there's four things that bring on a bear market, including an economic recession, a "hostile" Fed and an overvalued and euphoric market.
The fourth factor is a geopolitical event that's unpredictable, he reasoned. But there isn't a recession on the horizon, the Fed is far from hostile and investors don't seem very euphoric about the market, which isn't overvalued, Cooperman said.