‘Halfway there’: Billionaire investor Ray Dalio sounds the alarm on a stock bubble that is quickly approaching dot-com proportions

• Ray Dalio is warning of a bubble in stocks as they sit near all-time highs.
• Dalio told Yahoo Finance we’re “kind of like halfway there” to levels of the 1929 and 2000 bubbles.
• He said monetary inflation could hurt stocks if the Fed tries to keep interest rates low.

For legendary investor Ray Dalio, current stock market valuations can largely be traced to two things: high liquidity and low interest rates.

The fiscal and monetary stimulus from the federal government and the Federal Reserve over the last year in response to the COVID-19 crisis are propping up valuations and encouraging investors to drive up share prices as they look for yield.

But a third ingredient – investor behavior – is also contributing to the bubble forming in stocks right now, according to Dalio, who is the founder of Bridgewater Associates, which manages roughly $150 billion in assets.