Dalio: The market is in a bubble, but it hasn’t burst yet: Dalio believes the current U.S. stock market exhibits many characteristics of a bubble, but he clearly states that the moment of the bubble bursting has not yet arrived. He compares the current stage to late 1999 or the 2010-2011 period, suggesting the market might experience one last strong **“liquidity melt-up”**, where asset prices continue to soar crazily due to abundant liquidity before the bubble bursts. Key indicator: Wealth-to-Money Gap: This is the core logic of Dalio’s analysis. He points out that the current **“ratio of total financial wealth to total money supply” has reached its highest point in 120 years**. Logical analysis: When the financial assets people hold (stocks, bonds, etc., nominal wealth) far exceed the actual available money supply, the market becomes extremely fragile. If investors, for some reason (like liquidity tightening), need to liquidate assets into cash, there won’t be enough money in the market to absorb these sell-offs, and the bubble will burst instantly. Mechanism of bubble bursting: A bubble doesn’t burst simply because prices are too high. Dalio emphasizes that bubble bursting usually requires a catalyst, specifically **“when people need cash and are forced to sell assets”**. Currently, this “pricking of the bubble” moment hasn’t occurred yet because liquidity hasn’t dried up, and the Federal Reserve’s policy adjustments may continue to support this melt-up in the short term. Tactical advice: Hold on, but stay vigilant: Despite issuing warnings, Dalio’s advice to investors is **“don’t sell just because it’s a bubble”**. He suggests investors can continue holding positions for now and enjoy the final rally of the bubble, but they must recognize this as the “last hurrah” and be prepared to exit at any moment. In the long term (next 10 years), assets bought at current high valuation levels are expected to deliver very low returns. One-sentence summary: Dalio believes we are in a late-stage bubble similar to 1999, with the ratio of financial wealth to money at dangerously high historical levels. However, he advises investors not to leave the market yet but to cautiously participate in this final liquidity-driven “melt-up” until central banks tighten policies and burst the bubble.