“Maybe.” “Might.” “Possibly.” “Could.” And especially “in our view.”

Every sell-side research note contains one or more of those implicit caveats to account for the simple fact that nobody knows where asset prices will go next. About the best we can do is say “up, down or sideways,” as Morgan Stanley’s Mike Wilson suggested earlier this week.

If you’re hell-bent on fool’s errands, there are some marginally useful guideposts for determining when to buy stocks and when to stay away. That is, if you’re determined to engage in market-timing, there are a handful of things you should know, the most important of which, arguably, is that starting valuation can be a very good predictor of long-term returns. In short: It’s better to buy stocks when they’re trading cheap versus when they’re grossly expensive.

I’d gently note that if you need a “strategist” to tell you that (if that bit of wisdom doesn’t occur to you as self-evident), you need to get a financial advisor. Because you can’t be trusted to manage your own money.

There are any number of corollaries to the notion that it’s better to buy stocks when they’re cheap versus when they’re expensive. One of them says that when risk appetite’s elevated, prospective gains could be limited given that everyone’s already in the proverbial pool. Goldman reiterated as much in a wholly inconsequential note that somehow found its way into the financial headlines on Tuesday.

“Our Risk Appetite Indicator reached a new high since 2021 on Friday,” analysts including Andrea Ferrario and Christian Mueller-Glissmann remarked, in this week’s edition of the bank’s “GOAL Kickstart” series.

As the figure on the left shows, the last time risk appetite was this elevated, “Roaring Kitty” was in the news. (Oh, wait…)

There’s some nuance. As Ferrario went on to say, Goldman’s measure is being bolstered by ongoing compression in credit spreads, and also by weakness in haven currencies, partially offset by buoyant gold.

The figure on the right shows that although elevated RAIs don’t by themselves constitute bearish signals, “subsequent S&P returns have been capped starting from current levels,” as Ferrario put it.

In other words, the right-tail’s much thinner once everyone’s all aboard the risk-on train. To reiterate: If that’s not intuitive to you, don’t quit your day job.