Dario Bridgwater: The AI revolution is real, but high valuations and leverage may be creating a new bubble

Comparing news, Rui Dalio, founder of Qiaoshui Foundation, said that AI has revolutionary value in changing production methods, but the current market has also shown some characteristics that are in line with the rules of historical bubbles. Investors may ignore the gap between technical value and market price. When asset valuations are far higher than actual profitability and the capital environment is tightened, the risk of a bubble may quickly be revealed.

Dalio pointed out that the bursting of a bubble usually widens through the debt chain. Falling asset prices will depress the value of collateral, force highly leveraged investors to sell assets to repay debts, and further push prices down. If inflation rises again and the central bank raises interest rates, higher financing costs may also exacerbate market repricing.

He believes that the global economy is in a long-term cycle of debt accumulation, widening gap between rich and poor, political division, and changes in the pattern of international power. Investors should avoid concentrating their wealth on a single asset and reduce risk through diversified allocations such as stocks, cash, gold, bonds, and real estate; among them, gold, as a hard asset that is difficult to create, can play a role in diversifying risk during periods of currency depreciation and rising financial pressure.

Regarding the job market, Dalio believes that AI will replace some repetitive mental work, and that people who can collaborate with AI and continuously adapt to changes will have an advantage in the future. He stressed that even if the economy falls into recession, technological progress will not stop.

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