The measure Goldman Sachs uses to calculate market optimism, or appetite for taking risk, hit its highest ever point last month as stock and commodities prices rallied in December.
"Valuations are at very high levels. And that concerns us when it comes to making progress in stocks, unless you maintain a very high level of optimism," Christian Mueller-Glissmann, senior multi-asset strategist valuations, said at a conference in London on Monday.
"This is a chart which a lot of people have in the back of their mind right now. It's our risk appetite indicator. That essentially shows you across asset classes what the risk appetite is. And it has equity risk premium in there it, it has VIX, it has everything that reflects how bullish markets are and it's real time,"
And guess what, in the middle of December, that indicator had the highest level in the history of the indicator. We are not at the beginning of this optimism trade, we're really in the middle of that optimism trade."
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