(FORTUNE Magazine) – Marvin Schwartz is one of Wall Street's best-kept secrets. Though everyday investors may be unfamiliar with him, those well-heeled and in the swim know him to be an investing superstar. Schwartz, 62, now a principal with Neuberger Berman, began on Wall Street in 1961 toiling in the research department for $1.25 an hour. Today he presides over $5.5 billion of investors' money, which is a key part of Neuberger's crown-jewel wealth-management unit--a business that caught the eye of Lehman Brothers, which just agreed to buy the venerable firm. Schwartz's long-term investing record is outstanding. Over the 37 years he's been running money, Schwartz and his team of fellow value investors, known as the Strauss Group, have beaten the market 29 years. I recently sat down with the press-shy Schwartz in his offices for what turns out to be only the second interview in his career. --Andy Serwer

So you've seen all kinds of markets, Marvin. Where are we right now?

In a bit of sweet spot. Look, there's no question the bear market is over. It ran from March 2000 to March 2003. The economy has to kick in now, and I think it already has. Personal disposable income is climbing because of tax cuts and refi activity, and so too is GDP.

But aren't stocks expensive?

Stocks aren't as overvalued as the bears would have you believe. The median P/E on the S&P 500 is about 15 on 2004 earnings. We are looking for, and are able to find, good companies that sell for less than that. Year by year, the market goes up 75% of the time, and we just had three down years. Sometimes people tell me, "Marvin, you're always bullish." Well, it's served me pretty well, except for 2002.

So which stocks are you most bullish on?

The petroleum industry is very undervalued and attractive right now. Any oil analyst will tell you that oil will soon return to its "normal" price of $24 a barrel. That's wishful thinking. I pray for oil to go down because that would help the other 85% of our portfolio, but I believe we are inexorably moving toward a major energy crisis in this country. We like Anadarko. I just bought 50,000 more shares this morning. It used to be a Wall Street darling, but it hit some rough spots, and the stock now trades at $44. We think it will earn $5.50 this year and next. We also have Chevron, Conoco, and EOG Resources.

I see you own housing stocks. Isn't that business about to fall off a cliff?

I assume you mean because of higher rates, and sure, that's not a positive, but rates are still very low. Plus, what really drives this business is a healthy GDP and people having jobs, and you already know I am bullish on that. D.R. Horton has had earnings up for 100 quarters in a row. The stock sells for $30, and it should earn $4.60 next year. It sells for less than seven times next year's earnings! Centex is a brilliantly managed company. Pulte is another one we own. These companies are building affordable homes and gaining market share.

Are financial stocks a place to play?

Some of them. Citigroup is one of our largest holdings. At $44, it sells for 12 times next year's earnings and is one of the world's premier financial institutions. If a money manager needs to put dollars in the market, Citi is a stock he will buy.