Inventory costs look costly and inflated: | finance news
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A warning on the world’s largest shares from one of the largest names on Wall Road.
“I think it depends on what stocks — yes, the leading stocks, they’re expensive,” billionaire hedge fund founder Ray Dalio informed me on Yahoo Finance’s Opening Bid podcast (video above; pay attention in beneath).
Dalio says the Magnificent Seven names, akin to Nvidia (NVDA), Amazon (AMZN), and others, have change into “so expensive.”
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If the 10-year yield continues to rise as Dalio expects, these top-momentum names might be hit arduous.
“If you have an interest rate rise when it’s relatively expensive, it’s not likely to be good,” Dalio mentioned, including, “Rotation is the important consideration.”
Dalio stepped down as CEO of Bridgewater Associates in 2017 and handed over control of the firm in October 2022. His present function with the firm consists of mentoring the committee that has oversight over the company’s investment methods.
The investment veteran, with an estimated web value of $14 billion, is no stranger to creating against-the-grain markets and financial calls. Some have panned out, others, not but — if in any respect.
In an April 2022 interview, Dalio warned me about a period of stagflation —or gradual growth and high inflation. That did not precisely pan out from a growth standpoint because the world recovered from the COVID-19 pandemic. However world economies proceed to grapple with elevated ranges of inflation which are crimping client buying energy.
Extra lately, Dalio has been calling consideration to the US’s bloated deficit, which hit a staggering $1.8 trillion in fiscal 12 months 2024. He shares more of his debt considerations in a new online ebook known as “How Countries Go Broke.”
Worst-case situations on the US debt (akin to a main inflation outbreak) have not occurred. However the markets usually are not ignoring the difficulty, with the Trump administration possible including to debt ranges by extending his signature tax cuts.
Learn more: Why TD Ameritrade’s former CEO is bullish on the Trump trade
Traders are fretting over a 10-year bond yield hovering close to five%, a rising US greenback, risk of a trade warfare from the Trump administration, coverage uncertainty from the Fed, and pullbacks in prime Magazine Seven names like Nvidia.
Shares are “priced for perfection,” warned Goldman Sachs strategist Peter Oppenheimer this month.
Dalio thinks the US must get its debt scenario so as. Since that is unlikely to occur within the near-term, Dalio mentioned the average investor must be taking a arduous take a look at their portfolio.
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