Although some economists have raised concerns that the U.S. stock market is in a speculative bubble, investor Ray Dalio dismisses those fears, stating that it “doesn’t look very bubbly.”
Dalio, the founder of one of the world’s largest hedge funds, Bridgewater, said he examines the current market based on his criteria for a bubble. This includes sentiment, valuation, new buyers and unsustainable conditions.
The S&P 500 has continued to rally over the past few months, led by the “Magnificent Seven” stocks, which has led to some worries about the sustainability of the recent bull move. Dalio disagrees, stating that the valuation of the “Mag-7” is slightly higher but not to an alarming degree.
“The Mag-7 is measured to be a bit frothy but not in a full-on bubble,” he wrote on LinkedIn. “That said, one could still imagine a significant correction in these names if generative AI does not live up to the priced-in impact.”
