Taps Coogan – June 30th, 2021

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Ray Dalio, co-chairman and founder of Bridgewater Associates, the world’s largest hedge fund, recently spoke for a Robinhood non-profit event and broke down the methodology he uses to determine whether or not we are in a ‘bubble.’

 

Mr. Dalio uses six criteria and applies them to determine whether or not the overall market is in a bubble. Those criteria are summed up below:

 

He then applies the same criteria to individual companies to come up with a ratio of how many companies in the market are ‘bubbly.’

Regardless of how one debates the metrics Mr. Dalio lays out, the most interesting chart may very well be the following one below, which suggests that the best analogy for this moment in time may actually be the mid-to-late 1940s. Let’s hope…

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