'There's definitely a bubble in markets,' Ray Dalio says. But that doesn't mean you should sell.

Ray Dalio, founder of Bridgewater Associates, warns of a market bubble, suggesting it's 80% similar to past bubbles. However, he advises against selling stocks, emphasizing that much can rise before a burst. Dalio highlights the risk of 'weak hands' using leverage and potential threats like monetary policy tightening or wealth taxes. Despite these concerns, markets, including the S&P 500, saw gains following Nvidia's strong earnings report.

By Joseph Adinolfi The situation today is not quite the same as the dot-com bubble, but the market is about 80% of the way there, says Bridgewater founder Dalio "A lot can go up before the bubble bursts," said Ray Dalio, founder of Bridgewater Associates. 'There is definitely a bubble in markets.'Ray Dalio That was Ray Dalio, billionaire founder of hedge-fund behemoth Bridgewater Associates, speaking during an interview on CNBC Thursday morning. Despite his bubble warning, Dalio said the current situation in markets doesn't exactly resemble past bubble peaks like the ones investors witnessed in 1999 and 1929. Rather, according to several indicators he monitors, Dalio said the U.S. market is currently about 80% of the way there. That doesn't mean investors should bail out of stocks. Rather, Dalio recommended keeping an eye on the "weak hands" - that is, those investors who have relied too heavily on leverage to boost their returns. "I want to reiterate, a lot can go up before the bubble bursts," Dalio said. The risk that these weak hands might be forced to capitulate, either because of a tightening of monetary policy or for some other reason like the adoption of a wealth tax, is a bigger threat to stock-market stability than the controversial circular financing that has become a key feature of the artificial-intelligence build-out, Dalio said. In California, a union has proposed a referendum that could appear on the ballot next year calling for a one-time emergency wealth tax of 5% on billionaires living in the Golden State. The union will soon begin the process of collecting the 875,000 signatures needed to get the measure on the ballot. Investors have also been using more leverage to juice their stock holdings recently. Data from Finra showed total outstanding margin debt owed to U.S. brokers hit another record high of nearly $1.2 trillion in October - although that figure looks less meaningful when compared with value of all U.S. publicly traded securities, which is also near record highs. "A tightening of monetary policy is classic, but also something like wealth taxes can happen," Dalio said. The S&P 500 SPX was up sharply on Thursday after Nvidia Corp. (NVDA) impressed the investing public with its latest quarterly earnings. The results sparked a broad-based rally, halting - at least for now - a selloff that had slammed many popular AI names over the past few weeks. The Dow Jones Industrial Average DJIA and Nasdaq composite COMP were also up. -Joseph Adinolfi This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 11-20-25 1030ET