Add to that the stock market’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 — who have made billions of dollars over the decades — say that stocks are still the best place to park your money for the foreseeable future.

“The stock market is setting up like a springboard right now,” 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. “I tell them it’s not inconceivable that their money is going to increase eightfold in about 25 years,” he says.

His logic is simple. In the past 12 years the market has gained only about 20%. But earnings power for the companies in the S&P 500 (SPX) — the amount those corporations are expected to earn for the year — 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’s view. Baron thinks inflation, the enemy of cash and bonds, is on the rise. It affects consumers (“When I started driving, a new car cost $3,000 to $4,000; now it’s 10 times that,” he says), and it can be deadly for certain investors. “If you had your money in cash starting in 1958, you lost 4% of your investment each year because of inflation — that’s 90% of your investment gone over 50 years,” he says. “But if you invested in stocks, you made 25 times your money, and I think the same thing is going to happen again.”

He’s not the only billionaire investor who’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. “By default, stocks are the best house in the neighborhood, and if all goes well, it could be a really great neighborhood,” he says.

Rather than follow all the negative headlines, Cooperman rattles off a list of business leaders he listens to instead: “The CEO of Caterpillar (CAT) says business is improving outside the U.S., [General Electric (GE) chairman and CEO Jeff] Immelt says business is getting better every day, [Berkshire Hathaway (BRKA) chairman and CEO Warren] Buffett says business is steadily improving.”

Cooperman spent 25 years at Goldman Sachs (GS) 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’s another reason he likes stocks: So many others don’t. “Market players are still conservative; the public is still scared,” 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. “That’s a plus,” says Cooperman.

The general discomfort with stocks also makes Baron feel more comfortable in his convictions. He remembers a 1979 article in Business Week titled “The Death of Equities.” He was reading a book his uncle had given him by stock market contrarian and showman Joe Granville. “It opened my eyes that you’re supposed to buy stocks when news is really bad and sell when everything is really good,” says Baron.

And if he saw a cover story today predicting the end of equities? “It would just make me feel better,” says Baron. “People always think the wrong thing at the wrong time.”