According to Fortune, Bridgewater Associates founder Ray Dalio says investors shouldn’t sell stocks just because markets are in bubble territory, despite acknowledging current economic vulnerabilities. The 76-year-old billionaire, worth $15.4 billion according to Forbes, warned that while we’re clearly in bubble territory, the conditions needed to pop it aren’t present yet. He specifically pointed to tight monetary policy as the typical bubble-burster but noted “we’re not going to have that now.” Dalio did caution that investors should expect very low returns over the next 10 years given current market correlations. Other leaders like JPMorgan’s Jamie Dimon compared today’s AI boom to the early internet days, suggesting the technology will ultimately pay off despite some speculative excess.
The bubble nobody wants to pop
Here’s the thing about bubbles – everyone knows they exist, but nobody wants to be the one who pops them. Dalio makes a fascinating point about what actually causes the burst: when people need to convert their paper wealth into actual cash. “You can’t spend wealth, you have to sell wealth,” he notes, which is basically what triggers the downward spiral. But with monetary policy remaining relatively loose, that pressure point hasn’t arrived yet. It’s like we’re all watching a balloon inflate, knowing it could pop at any moment, but the air keeps flowing in.
AI speculation meets reality
What’s really interesting is how divided the smart money is on AI. You’ve got Dimon comparing it to the internet boom – which ultimately produced giants like Google and Meta – while Alphabet CEO Sundar Pichai admits there’s “irrationality” in the current frenzy. Even UBS’s chief investment officer Mark Haefele warns about bubble risks while acknowledging AI’s potential for productivity gains. So we’re stuck in this weird limbo where everyone recognizes the speculation, but nobody wants to miss the next big thing. Remember when every company was adding “.com” to their name? Now it’s all about adding “AI” – and the pattern feels awfully familiar.
What should investors actually do?
Dalio’s advice is essentially: don’t panic sell, but temper your expectations. He’s not saying get out of the market entirely – he’s saying prepare for lower returns over the coming decade. And UBS echoes this with their warning about overexposure to AI risks. The tricky part is figuring out what’s genuine innovation versus pure speculation. When even the CEO of Google parent Alphabet admits no company would be immune from an AI bubble burst, that tells you something about the widespread nature of this phenomenon. Basically, diversify, don’t bet the farm on any single trend, and remember that bubbles can inflate for much longer than anyone expects before they finally pop.
