Investor Risk Appetite Hits Five-Year High—Goldman Sachs Data Reveals What’s Next
Risk is back on the menu. Goldman Sachs just served up the data to prove it.
Investor sentiment hasn't been this hungry in half a decade. The numbers don't lie—they scream. After years of playing defense, portfolios are pivoting to offense. The fear gauge is cooling. The greed indicator is warming up. It's a full-scale rotation out of safety and into speculation.
The New Playbook
Forget slow-and-steady. The five-year high in risk appetite signals a market-wide shift in strategy. Capital is moving. It's chasing higher volatility, bigger narratives, and assets that were unthinkable just a few quarters ago. This isn't a tweak—it's a wholesale rewrite of the allocation model.
What's fueling the surge? A potent cocktail of fading macro fears, liquidity looking for a home, and that old market magic: FOMO. When the big money starts leaning in, the herd isn't far behind.
The Cynical Take
Of course, on Wall Street, a 'five-year high' in risk appetite just means the last guy to get cautious finally gave up. It's the financial equivalent of a dare—someone always ends up holding the bag.
The bottom line? The data confirms the mood. The guardrails are coming off. Whether this ends in a victory lap or a spectacular crash depends entirely on what happens next. Buckle up.
Small caps lead the charge
The strongest signals come from investors picking small-cap stocks over large-cap companies.
Small-cap stocks have had a strong start to the year. The Russell 2000 index jumped 7.5% in its best opening since 2021, CNBC reported on January 26, 2026. The index beat the S&P 500 by more than 830 basis points in just 15 trading sessions. A Jefferies strategist called the performance “incredible.”
There are good reasons for the shift to smaller companies. Analysts expect the Russell 2000 to grow earnings between 30% and 35%, compared to 22% growth for the Magnificent 7 large-cap technology stocks, according to a January 27, 2026 report by FinancialContent. Smaller companies also benefit from Federal Reserve rate cuts, which ease the pressure from their floating-rate debt.
Wall Street’s rotation away from big tech
As reported by Cryptopolitan previously Wall Street has been increasingly bullish on riskier stocks, with investors placing more bets on the Russell 2000 than on the S&P 500. Last week, tech sector funds saw $900 million in outflows, while $8.3 billion went into other industries including materials, health care, and industrials.
Emerging market stocks have also attracted significant investor attention, with some indexes posting their longest winning streaks in decades. The preference for emerging markets reflects confidence that global economic conditions will support these higher-risk investments.
Gold prices are one of the few signs that some investors remain cautious. The precious metal has more than doubled over the past two years. Investors have bought gold as a SAFE place amid political risks and as an alternative to currencies and bonds.
Goldman strategists said removing gold from their risk calculation WOULD have pushed the index even higher.
The bank’s strategists are overweight on equities based on the current economic environment. This means they think stocks will keep delivering strong returns.
Despite previous warnings about market risks, the combination of economic Optimism and risk-taking behavior marks a shift in investor psychology. While geopolitical concerns remain present, they appear to be taking a back seat to positive expectations about economic growth and corporate earnings.
The data shows investors are moving money into assets traditionally seen as riskier but offering higher potential returns. How long this appetite for risk lasts depends on economic performance in the coming months and whether current conditions hold up.
Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
