Hedge fund manager Ray Dalio said on Thursday he believes equities prices are high, but dismissed concerns among some investors that stock markets are overbought.
"I don't think they are higher than they should be, but they are high," Dalio, said of asset prices at the Harbor Investment Conference. "We are not in a bubble."
Dalio's Westport, Connecticut-based Bridgewater Associates ranks as the world's biggest hedge fund with $165 billion in assets, and traditionally bets on trends in interest rates, currencies and commodities.
In the wake of strong stock market gains, investors have been debating for some time whether equities have become too expensive and are watching closely what prominent investors like Dalio have to say about the topic.
Dalio said he uses both long and short investment strategies, and that he traditionally holds his bets between 6 months and 18 months. "There are a little over a 100 return streams but they are made up of a lot of things," Dalio said.
Stocks have been buoyed by easy money policies plus fresh data that point to stronger economic growth. But if growth should slow, Dalio warned that governments would have few levers to pull given interest rates are already near zero.
He was being interviewed by William Ackman, who runs hedge fund Pershing Square Capital Management which earned a 40 percent return last year. Dalio started 2015 off on a strong note with a 8.3 percent gain in January, beating most other so-called global macro investors, a person familiar with his portfolio said.
Asked to lay out exactly how he invests, Dalio said he uses a lot of artificial intelligence. But Dalio quickly turned the tables on Ackman, asking the activist investor how he selects the roughly 10 companies he has in his portfolio.
"You use artificial intelligence, hopefully I use natural intelligence," Ackman said to Dalio to laughter from the crowd. Dalio said computers are correct two-thirds of the time.
Ackman then asked Dalio how he chose his wife of 37 years. "Passion," Dalio shot back.
Ackman runs the conference together with Mark Axelowitz, a managing director at UBS Private Wealth Management.