Billionaire investor Ray Dalio believes that the U.S. stock market is not in a speculative bubble. The founder of Bridgewater Associates, one of the world’s largest hedge funds, analyzes the market based on his bubble criteria, which include valuations, sentiment, new buyers and unsustainable conditions. “When I look at the U.S. stock market using these criteria, it — even some of the sectors that have seen the biggest gains and received media attention — don’t look very active,” he said in a new LinkedIn post on Thursday. .SPX 1Y mountain S&P 500 The S&P 500 is ending its fourth month of gains after hitting a record high on continued enthusiasm around artificial intelligence. The seemingly sustained rally, led by the so-called “Big Seven” stocks, has some worried about the sustainability of the latest bull run. Dalio said Mag 7’s valuation is slightly expensive, but not excessively so. “The Mag-7 measured a bit frothy, but not completely frothy,” he wrote. “Having said that, if generative AI doesn’t have a pricing impact, one can still imagine a significant correction in these names.” The widely followed investor links AI darling Nvidia to the late 1990s dot-com bubble Period Cisco was compared. While their price trajectories look similar, their cash flow paths are very different. Dalio pointed out that Nvidia’s two-year forward price-to-earnings ratio is currently about 37, while Cisco’s price-to-earnings ratio reached 100 at the height of the dot-com bubble. “The market is pricing in far more speculation/long-term growth than what we’re seeing today,” he said.
