With the U.S. stock market soaring, Ray Dalio, founder of Bridgewater Associates (hereinafter referred to as Bridgewater), the world’s largest hedge fund, said on the 29th in response to some analysis that the U.S. stock market has recently been overvalued, “It doesn’t look like there’s much of a bubble.”
In an article posted on LinkedIn that day, Dalio said that compared to various criteria for evaluating stock market bubbles, the recent overall situation in the U.S. stock market remains in the middle category compared to past history.
His conclusion is that although the stock market has shown a significant upward trend since last year, it is difficult to say that it is in a bubble situation.
Regarding the ‘Magnificent 7’ (M7), which refers to the seven American Big Techs (giant technology companies), it was judged that “although it is evaluated as slightly foamy, the overall conditions are not considered a bubble situation.” However, he cautioned, “You could still imagine a significant correction in these stocks if generative artificial intelligence (AI) does not live up to expectations as first reflected in the stock price.”
In making this statement, he assessed that Alphabet and Meta are still “somewhat cheap” and that Tesla is “somewhat expensive.” Dalio has internally developed indicators that can measure the economic situation and the possibility of a crisis and has been warning of the possibility of a crisis due to increased debt since early 2007, just before the financial crisis. However, some say that predictions are not always accurate as they do not respond properly to the rebound immediately after the financial crisis and the rapid recovery of the stock market during the pandemic.