Big Bubbles

+ Greg Jensen, Mohamed El Erian, Hetty Green, Charlie Munger, Andrew Slimmon

The Idea Farm
December 07, 2025

Sponsored by

“It is easy, of course, to pick out good companies, companies that are better than other companies. The problem is that they may not be good investments.”

— Marty Whitman

Research

Ray Dalio - The Big Dangers of Big Bubbles with Big Wealth Gaps (23 pages)

Ray Dalio explains how bubbles form when financial wealth grows far faster than actual money, then burst when investors must sell to raise cash. He warns that today’s extreme wealth gaps and potential wealth taxes could trigger forced selling, social conflict, and major shifts in policy and asset values.

Source: Ray Dalio. As of November 20, 2025.

Hussman Funds - A Payroll Playbook to Gauge Recession Risk (18 pages)

Bill Hester lays out a payroll based framework for reading recession risks from upcoming jobs reports. The note focuses on which sectors drive employment losses in downturns and how a cooling labor market could raise the odds of equity weakness in an already richly valued market.

Principal Asset Management - Global Market Perspectives Against all odds (23 pages)

Principal Asset Management sees a still constructive outlook for risk assets, supported by resilient growth and AI related investment. They emphasize balance and diversification, favoring second order beneficiaries, cheaper global markets, and selective private assets rather than chasing the most crowded winners.

GMO - It’s Probably A Bubble, But There Is Plenty Else To Invest In (10 pages)

Ben Inker argues current AI driven market enthusiasm looks like a classic bubble but still leaves room for sensible portfolios. He outlines how an agnostic investor can tilt toward non US stocks, deep value, and liquid alternatives to be resilient whether AI soars further or eventually deflates.

Acadian - World Equity Allocations: Global in Name Only? (6 pages)

Acadian Asset Management argues that many global equity allocations are effectively U.S. large cap portfolios with modest regional add ons. They suggest investors moderate benchmark concentration by tilting toward non U.S. markets to restore more balanced fundamentals and risk characteristics.

Sources: Acadian Asset Management LLC, MSCI. As of November 2025.

Bonus Content

Ben Thompson covers the benefits of bubbles. Link

Morgan Stanley’s Andrew Slimmon shared an update on the equity market. Link

Gregory Zuckerman covered Charlie Munger’s final years. Link

Here are 5 reasons retail should be wary of private credit. Link

Polen Capital investigates if now is a turning point for small caps. Link

Will bonds diversify like they used to?

If you’re still fielding that question from clients, it may be time to look at the Alpha Architect Tail Risk ETF - ticker CAOS.

CAOS is built as a buy-and-hold diversifier designed to respond during fast market selloffs like 2020, while generating positive returns in normal markets, historically. It’s a potential fit for advisors exploring a bond replacement or a low-correlation sleeve in their portfolios.

Prepare for tomorrow today with CAOS.

Learn more about Alpha Architect: funds.alphaarchitect.com/caos

Investors should carefully consider the investment objectives, risk, charges, and expenses of the funds. This and other important information is in the indicated fund's prospectus, which may be obtained by calling (215) 882-9983 or by visiting https://funds.alphaarchitect.com/documents/. The prospectus should be read carefully before investing. The Fund is distributed by PINE Distributors LLC.

Podcasts

11/20/2025 - 26 minutes

Mohamed El-Erian: 'AI Is In a Rational Bubble'

Mohamed El Erian explains why AI looks like a rational bubble, reviews macro risks and the state of the Federal Reserve, and shares practical portfolio positioning ideas.

Apple | Spotify | YouTube