Ray Dalio, the founder of hedge-fund behemoth Bridgewater Associates, says he believes investors haven’t necessarily been investing on a firm footing and that it’s a condition that will eventually have to be rectified.

“ ‘They’re selling dreams. They’re not selling earnings, and they’re not even selling a path to earnings.’ ”

The prominent investor, during a particularly downbeat CNBC interview on Tuesday, suggested investors are flush with cash because of monetary policy but haven’t been discerning about investment strategies. They are “buying dreams rather than earnings and stocks,” he said.

His comments come as WeWork parent We Co. canceled a prominent public sale of stock amid a fervor over its business model and valuation.

At the same time, results for the third quarter have come in better than feared but have otherwise been weak on absolute terms.

Dalio, whose fund counts some $150 billion in assets under management, painted a particularly gloomy picture of financial markets that have managed to register all-time highs after a fitful past several months.

The Dow Jones Industrial Average DJIA, +1.33% on Monday recorded its first all-time closing high since July 15, joining the S&P 500 SPX, +1.59% and the Nasdaq Composite COMP, +2.26% in record territory, amid growing hope that a long-running trade dispute between China and the U.S., can be resolved.

Dalio also later Tuesday wrote an essay titled “The World Has Gone Mad and the System Is Broken” on LinkedIn, which reiterated many of the points he made on CNBC. “Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give,” he wrote, referencing government debt around the world that yields less than 0% and trillions of debt in which investors pay borrowers to park their money.

Read:Are jobs and trade news blinding investors to stock-market dangers ahead?

Here’s an excerpt from that essay:

Because investors have so much money to invest and because of past success stories of stocks of revolutionary technology companies doing so well, more companies than at any time since the dot-com bubble don’t have to make profits or even have clear paths to making profits to sell their stock because they can instead sell their dreams to those investors who are flush with money and borrowing power.

The hedge-fund investor also during his CNBC interview Tuesday that he believed that monetary policy is “stuck. you can’t raise rates because as a result of the stimulation companies and various entities have a lot more debt,” he said.

Hence, he warned that financial markets could be facing a “big squeeze.”

Dalio told CNBC at the Greenwich Economic Forum that he felt that companies will struggle to increase profit margins, which have been near records and with a greater likelihood of producing lower margins as companies struggle to cut costs further than they already have.

“There are not a lot of things to push that higher,” Dalio said, explaining that profit margins had gone up from 7% to 14%, by his estimates.

The 70-year-old investor also lamented the U.S. government’s budget deficit, which is just under $1 trillion in the just-closed fiscal year, according to the latest, almost official estimate by the Congressional Budget Office.

Check out an excerpt from of the interview below: