ray dalio

Summary List Placement
Ray Dalio’s bubble indicator suggests the US stock market isn’t dangerously high.
However, it found that 5% of the top 1,000 US companies are in “extreme bubbles.”
It also identified froth in stock prices, new buyers, bullishness, and use of leverage.

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Ray Dalio’s bubble indicator suggests US stocks aren’t trading at unsustainable prices and could climb higher.

The billionaire co-chief of the world’s largest hedge fund, Bridgewater Associates, said in a research note this month that his market gauge is at the 77th percentile for the overall US stock market. Its readings for the bubbles in the 1920s and 1990s are in the 100th percentile.

However, Dalio noted that 5% of the top 1,000 US companies — including several emerging-technology players — are currently in “extreme bubbles.” Still, that’s less than half of the percentage at the height of the dot-com boom.

Dalio’s bubble indicator combines six measures of the stock market. They are: 

How high are prices relative to traditional measures?
Are prices discounting unsustainable conditions?
How many new buyers have entered the market?
How broadly bullish is sentiment?
Are purchases being financed by high leverage?
Have buyers made exceptionally extended forward purchases to speculate or protect themselves against future …read more

Source:: Businessinsider – Finance


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