Ray Dalio says Stocks are NOT in a BUBBLE
๐Are US Stocks in a Bubble? The S&P 500 $SPX500 is at all time high even though we have a recession. The CAPE ratio is very high. The Buffett indicator is at 200%. ๐ผ๐ก๐ก ๐จ๐๐๐ฃ๐จ ๐ค๐ ๐ ๐๐ช๐๐๐ก๐. ๐ฝ๐ช๐ฉ ๐ฌ๐ ๐๐๐ฃ ๐๐๐ซ๐ ๐๐ง๐๐ช๐ข๐๐ฃ๐ฉ๐จ ๐๐๐๐๐ฃ๐จ๐ฉ ๐ ๐๐ช๐๐๐ก๐. Maybe the CAPE ratio is so high because of zero interest rates. The Buffett indicator can be flawed because it doesn't take into consideration the balance sheet of the Federal Reserve System or that most US companies such as Apple $AAPL draws much of their revenues overseas.
๐Ray Dalio, the founder of the largest hedge fund in the world, Bridgewater Associates, has another metric (which is proprietary) and according to this metric, US Stocks are ๐ณ๐ณ% ๐๐ฃ ๐ ๐ฝ๐ช๐๐๐ก๐, unlike 1929 and 2000 when we were 100% in a bubble.
โRay Dalio talks about ๐ฒ ๐ข๐๐๐ฃ ๐ฅ๐ค๐๐ฃ๐ฉ๐จ ๐ฉ๐๐๐ฉ ๐๐๐ฉ๐๐ง๐ข๐๐ฃ๐ ๐ ๐๐ช๐๐๐ก๐:
1. How high are prices relative to traditional measures? Somewhat Frothy
2. Are prices discounting unsustainable conditions? No Bubble
3. How many new buyers (i.e., those who werenโt previously in the market) have entered the market? Frothy
4. How broadly bullish is sentiment? Frothy
5. Are purchases being financed by high leverage? Somewhat Frothy
6. Have buyers made exceptionally extended forward purchases (e.g., built inventory, contracted forward purchases, etc.) to speculate or protect themselves against future price gains? No Bubble
๐ But Ray Dalio sees ๐ ๐๐ช๐๐๐ก๐ ๐๐ฃ ๐๐ข๐๐ง๐๐๐ฃ๐ ๐ฉ๐๐๐. We have seen in recent years how the NASDAQ $NSDQ100 has outperformed the S&P 500. There are stocks with no real earnings with market caps of over $600 billion (I'm talking about Tesla $TSLA ) and investors are still expecting these stocks to be tenbaggers. I find it very unlikely for Tesla to be worth $6 trillion in 2030 and Apple $20 Trillion.
๐ต The bubble is here but only in some stocks. If you know where to look, you can still find cheap stocks. ๐๐๐ข๐๐ข๐๐๐ง ๐ฉ๐ค ๐๐ก๐ฌ๐๐ฎ๐จ ๐๐ค๐๐ช๐จ ๐ค๐ฃ ๐ฉ๐๐ ๐๐ช๐ฃ๐๐๐ข๐๐ฃ๐ฉ๐๐ก๐จ ๐๐ฃ๐ ๐ฉ๐๐๐ฉ ๐ฉ๐๐๐จ ๐๐จ ๐ ๐ก๐ค๐ฃ๐-๐ฉ๐๐ง๐ข ๐๐๐ข๐.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=m2PYbqCTwqM&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1
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