Home / Business and Economy / Dalio Warns of AI Bubble, Cites Low Future Returns
Dalio Warns of AI Bubble, Cites Low Future Returns
21 Nov
Summary
- Ray Dalio identifies an AI spending spree as a market bubble.
- He advises investors not to sell but to diversify portfolios.
- Dalio suggests gold as a potential investment diversifier.
Ray Dalio, the founder of Bridgewater Associates, has voiced concerns about a growing bubble in the market fueled by extensive AI-related spending. This assertion contrasts with denials from Nvidia's CEO, Jensen Huang. Dalio indicated that while a bubble is evident, its imminent burst remains uncertain, though he speculated that increased wealth taxes could be a potential trigger.
Despite acknowledging the bubble's formation, Dalio urged investors not to divest solely based on this observation. He pointed out that periods characterized by such speculative bubbles historically correlate with significantly low returns over the subsequent ten years. This suggests a need for a more nuanced investment strategy rather than outright selling.
Dalio recommended that market participants focus on diversifying their holdings to mitigate potential risks. He specifically suggested considering investments in assets like gold as a way to achieve portfolio diversification. This advice comes as benchmark indices on Wall Street experienced a notable reversal from intraday highs, ending lower.
