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Ray Dalio has advice for investors worried about a stock bubble: Don't sell.
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The conditions for a market bubble to burst have not yet occurred, he said in an interview with CNBC.
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Talk of a bubble has become a constant on Wall Street as investors anticipate big valuations and spending on AI.
Ray Galio thinks you shouldn't give up AI for now, even if you're worried that the market fad is a bubble about to burst.
The billionaire investor and founder of Bridgewater Associates said he believes stocks are definitely in trouble. bubble today — but that's still no reason for investors to get out of the AI trade, he said in an interview with CNBC on Thursday.
According to Dalio, there is a simple reason why investors should stay in the market: conditions for bubble there’s just no pop music right now,” he told the publication.
“Don’t sell just because there’s a bubble,” said the legendary fund manager. “You have to time it. What punctures the bubble? Right? Usually this is a tightening of policy. monetary policy. We won’t have that now.”
Dalio, who has repeatedly warned about bubble maturing risk assets, said he defines a market bubble as the creation of a large amount of wealth as a result of new events. Over time, questions begin to arise about who owns the wealth and who needs it, he said.
This is closely related to the dynamic development of the generative AI space where the AI hype has led. estimates for some tech companies into the stratosphere.
In recent weeks, investors have become increasingly concerned about the monetization plan for some of these companies, as well as the fact that many deals in the sector appear to be circular in nature.
According to Dalio, market bubbles are finally bursting when it becomes necessary to liquidate assets. Events like the Fed raising interest rates or hitting consumers with a wealth tax could trigger those sales, he said.
Both conditions appear to be absent from the markets for the foreseeable future. While December Fed rate cut has come under scrutiny due to incomplete and reliable labor market data, with markets estimating a 96% chance that rates will be below current levels by June of next year, according to CME's FedWatch tool.
California proposed introducing a wealth tax on billionaires, but its extension Tax cuts by President Donald Trump and other incentive measures in the presidential “Big handsome bill“Are a bullish force supporting markets,” analysts say.
“I want to reiterate: a lot can grow before the bubble bursts,” Dalio added.
Talk about stock market bubble has become ubiquitous on Wall Street as investors eye high valuations in the tech sector and concerns grow about the billions being poured into Investing in AI.
