World's elite gathers for Davos 2014

Stocks, bonds fairly valued: Bridgewater's Dalio

How the economic machine works: Dalio
How the economic machine works: Dalio

Hedge fund manager Ray Dalio painted a Goldilocks picture for stocks and bonds against the backdrop of massive asset purchases by central banks, saying: "They're not too high, they're not too low."

"We have a world in which we have an enormous amount of liquidity," Dailo said in a "Squawk Box" interview Wednesday from the World Economic Forum in Davos, Switzerland. "Liquidity means people want to buy financial assets. So we build up the prices of financial assets. ... They seem to be appropriate."

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Looking at the U.S., he said the Federal Reserve's quantitative easing bond buying program has pushed financial assets quite a bit, and as a result, future expected returns went down a lot.

As for the economy, "we are in the middle of the short-term debt cycle. In other words, you're out of the recession and you're not into tightening," said Dailo, founder of Bridgewater Associates, which has about $150 billion under management. "Those middle years are kind of the boring years."

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By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.