Analysts might argue you can’t have a bubble without a burst. With markets nearing correction territory, some investors might be wondering if the time to sell is nigh—but hedge fund founder Ray Dalio believes there’s no need to panic just yet.
The founder of Bridgewater Associates agrees with the general consensus that stocks are in some form of a bubble right now, arguing there are vulnerabilities in the economy. But that doesn’t mean it’s time to exit the play, he added.
What may cause such a pop is when people who have generated wealth from the bubble decide they want the cash for themselves. “The need for cash is always that which pricks the bubble, because … you can’t spend wealth, you have to sell wealth in order to get to buy the things you need, or pay the bills you have,” Dalio added. “I think the picture is pretty clear in that we are in that territory of a bubble, we are in that bubble territory, but we don’t have the pricking of the bubble yet.”
Heading into 2026, UBS’s chief investment officer Mark Haefele warned investors that while the equity outlook remains positive, they should be mindful of over exposure to the risks surrounding AI.
As he wrote in his monthly house view note to clients yesterday, in the medium term AI has the potential to deliver the productivity improvements to help economies achieve a new era of growth. However, “much will depend on investors’ willingness to keep funding it, tech leaders’ ability to monetize it, and the world’s capacity to supply the energy needed to power it.”
He cautioned: “Strong capex and adoption should fuel further gains in 2026, though investors should be mindful of bubble risks.”
