Ray Dalio broke out his “bubble indicator” on Monday and located that about 5 per cent of the top 1,000 corporations in the US had been priced at what he referred to as unsustainable ranges.
“I’ve seen a lot of bubbles in my time and I have studied even more in history,” he wrote in a publish on LinkedIn, including that his proprietary system tracks six measures together with costs relative to conventional measures, new patrons and leverage.
While Dalio acknowledged “very big divergence” amongst stocks as we speak, he stated his total “bubble gauge” for the US inventory market is across the 77th percentile. That compares to one centesimal percentile readings that occurred in the bubbles seen in 2000 and 1929.
“This market action is reminiscent of the ‘Nifty Fifty’ in the early 1970s and the dot-com bubble stocks in the late 1990s, both of which I remember well,” Dalio wrote. “It scores similarly to the bubble stocks of the late 1920s, which I can’t remember because I wasn’t alive then.”