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Ray Dalio says the US stock market 'doesn't look very bubbly'

Published 03/01/2024, 04:50 AM
Updated 03/01/2024, 04:50 AM
© Reuters.

Ray Dalio, the billionaire founder of Bridgewater Associates, said in a LinkedIn post Thursday that the Magnificent Seven group of stocks is a "bit frothy but not in a full-on bubble.”

Dalio thinks shares of Google owner Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) are still “somewhat cheap” while Tesla (NASDAQ:TSLA) looks “somewhat expensive.”

This analysis was part of Dalio's broader examination of the U.S. stock market's sustainability amidst ongoing rallies.

By employing a proprietary formula that assesses factors such as current prices, the influx of new buyers, prevailing bullish sentiment, and the level of leverage, Dalio has concluded that the overall U.S. stock market "doesn't look very bubbly.”

"These levels are not consistent with past bubbles," Dalio wrote. "Our readings suggest that, while equities may have rallied meaningfully, we’re unlikely to be in a bubble."

He said that the market capitalization of the so-called Magnificent Seven stocks has mostly expanded proportionally to their earnings. However, he also said his confidence in these companies is lower, citing the uncertain impact of artificial intelligence on their future performance.

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