Bridgewater founder Ray Dalio told CNBC’s “Squawk Box” on Thursday that “There’s definitely a bubble in markets,” although he also said that a bubble isn’t a reason to sell.
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“Don’t sell just because there’s a bubble,” he said. “But if you look at the correlations with the next 10 years’ returns, when you are in that territory, you get very low returns.”
Dalio’s comments come amid persistent concerns of an AI bubble, with Nvidia (NVDA) reversing its gains after reporting a top- and bottom-line earnings beat, further fueling fears.
Dalio Flags Bubble Risks, Sees No Immediate ‘Pricking’ Catalyst
Dalio described a bubble as an “unsustained amount of buying” and an “unsustained amount of valuation,” adding that the current market environment is 80% of the way there compared with the bubbles seen in 1929 and 2000. At the same time, the market doesn’t “have the pricking of the bubble yet.” He noted that catalysts that could pop a bubble include tightening monetary policy, wealth taxes, which could force sales of assets, and the need for cash.
Finally, Dalio recommended diversification in gold (XAUUSD) to hedge risk. The precious metal is up by 55% year-to-date and is on track to have its best year since 1979.
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