Dario Qiaosui: The market has collected 80% of the bubble signals in 1929 & 2000, but don't blindly sell

The Zhitong Finance App learned that Ray Dario, founder of Qiaoshui Fund, believes that the current market has entered a bubble zone. He warned that “we already have the iconic conditions of about 80% of the bubble period in 1929 and 2000.” In an interview, Dario explained that despite these warning signs, investors “don't have to rush to sell.”

“There must be a bubble in the market,” he defined the bubble as a state of “creating a large amount of wealth” through a mechanism of inflated valuations and excessive multiples.

The billionaire hedge fund manager pointed out that the current concentration of wealth and high leverage are typical characteristics of the bubble.

Dario emphasized that “timing” is critical when investigating bubbles. “Don't sell just because there's a bubble,” he cautioned. Historical data shows that buying and holding at a similarly high valuation level for 10 years, the average annual return “ranges from +2% to -2%.”

This investment veteran explains the mechanism of a bubble bursting: there must be a triggering event. “The bubble has to be pierced,” he said, usually when investors “need cash” and are forced to sell assets, a real catalyst is formed; monetary tightening often plays this role, but “we won't experience this right now.”

According to Dario's analysis, current market fragility stems from ownership structures and leverage. He divided the capital side into “strong hands” (owners of companies using their own funds) and “weak” (leveraged retail investors). Concentrating assets on the latter would significantly increase market fragility.

He concluded, “We are in the bubble zone, but the bubble hasn't been pierced yet.”