The stock market has been chugging along nicely over the last few years, with both the S&P 500 and FTSE 100 hitting record highs.

But with valuations getting stretched and geopolitical tensions rising, fears of a new incoming crash are starting to spread. And just last month, billionaire investor Ray Dalio expressed his concerns about a potentially incoming market meltdown.

So, what exactly is he predicting? And what should investors do to protect themselves?

An incoming “capital war”

Dalio may not be as well-known as Warren Buffett. But he similarly has established an impressive track record of beating the market over the long run and is the founder of Bridgewater Associates, the largest hedge fund in the world.

Speaking in Dubai in February, he expressed fears that geopolitical, trade, and sanction escalation is driving down purchases of US Treasuries from foreign investors, particularly from China.

Why is this so dangerous?

With lower demand to buy US debt, the yield for government bonds goes up to attract investors back. But since treasury yields also drive the coupons demanded by investors for corporate bonds, US debt as a whole becomes more expensive.

Left unchecked, borrowing costs for both the US government and American businesses could rise dramatically.

That’s obviously a problem for businesses of all sizes. But it’s particularly disastrous for US tech giants who are currently relying heavily on debt financing to fund their aggressive AI spending plans.

If debt becomes too expensive, AI infrastructure spending could drastically increase, bursting the so-called AI-bubble and potentially triggering a stock market crash.

What now?

It’s certainly concerning to hear investors as skilled as Dalio warn of an impending market implosion. However, it’s important to recognise that this scenario is far from guaranteed.

So far, the latest data from the US Treasury Department actually show the opposite happening. In 2025, $1.6trn was invested by foreign investors into US assets, up from $1.2trn in 2024. And while China has been a net seller of US Treasuries, the higher yields seen so far have attracted new pension funds, asset managers, and insurance groups to take advantage.

In other words, Dalio’s prediction of a debt spiral may never come to pass.

But let’s assume the worst and say disaster is right around the corner. What should investors do now?

Capitalising on chaos

With so much wealth concentrated into the tech sector, there are a lot of other businesses in other sectors that have fallen under the radar. And consequently, even in today’s market, some attractive non-AI opportunities have emerged.

Take Waste Management (NYSE:WM) as a prime example to consider.

The idea of investing in a glorified garbage collection business may not sound particularly thrilling. But underneath the ugly shell lies a US monopoly, with a long-term contractually locked-in revenue stream that automatically scales with inflation.

During recessions, demand stays the same. This continuous, reliable income, paired with promising landfill gas-to-energy projects, has translated into impressive free cash flow generation that’s paved the way to 23 consecutive years of dividend hikes.

Dalio’s higher borrowing costs forecasts do potentially pose a threat. After all, building and maintaining waste management infrastructure isn’t cheap. And it could hamper future free cash flow growth. But as a defensive long-term holding, Waste Management definitely looks interesting in an uncertain stock market environment.