During true bull markets, it’s normal for investors to creep further out on the risk curve in search of alpha.
Money managers do this as an effort to keep up with their benchmark.
Retail investors and traders do it… well, because it’s just human nature.
You see, if everything is going up, you need to own the stuff that’s going up the most in order to outperform.
And that’s what the good times are all about.
For this reason, the relative trend in high beta stocks is packed with information about risk appetite.
If it’s a bull market and investors are embracing risk to drive performance, we’ll see it in the price action. High beta stocks will be the leaders.
On the flip side, low-volatility stocks are built for defense. They tend to outperform when markets are under pressure and investors shift toward safety.
Here’s the high beta vs low vol ratio:
Seeing the ratio soar to its highest level in history tells me I should trust the new highs in equities. The riskiest, highest-flying stocks are confirming the bull market environment.
As long as these new highs hold, the weight of the evidence continues to point higher for equities.
We’re going to keep pressing the gas and playing offense until all that changes.
Our AI trades have been on fire. Remember BigBear.ai Holdings $BBAI? Our latest calls are up 500%, and the July expiration calls are up 400%.
The stock might have already left the station… but we just entered a similar setup in another AI name that’s breaking out right now.
