Goldman Sachs Analysis: Witnessing Investors Willing to Take Risks Despite Increasing Global Tensions

As we enter the first quarter of 2026, analysts from Goldman Sachs have identified an interesting phenomenon in the global capital markets: investors continue to demonstrate the courage to take higher risks, despite escalating geopolitical threats. Analysts note a significant shift in investor behavior since the end of last year, when risk appetite steadily increased from December to January.

This change reflects growing confidence among market participants, even as they face greater uncertainty on the global stage. This development presents an intriguing paradox: the higher the geopolitical risk, the more aggressive investors become in positioning their assets.

Margin Leverage Reaches Highest Level in Five Years

Data derived from Goldman Sachs research shows a dramatic increase in investor margin account leverage. Since mid-2025, margin usage levels have peaked—highest since 2021. This phenomenon indicates that retail investors are no longer cautious in using borrowed funds to amplify gains.

This surge has continued into early this year, signaling that the appetite for risk remains at a peak. Investors seem confident that the market will continue to offer profit opportunities, prompting them to increase exposure by leveraging larger positions.

Retail Investors Diversify Beyond Dominant Stocks

In addition to increased leverage, analysts have also observed significant changes in retail investors’ asset allocation patterns. They are no longer solely focused on the ‘Big Seven’—the seven largest US tech companies dominating the market—but are beginning to shift funds into various other sectors and geographic regions.

This diversification strategy reflects a search for higher yields and an effort to reduce risk concentration on a few major names that have delivered outstanding performance. Investors are increasingly believing that profit opportunities are more widely spread across the global market, not just concentrated in US mega-corporations.

VIX Short Positions Reach Decade-High Levels

The most striking phenomenon is the explosion of short positions on the VIX volatility index. According to Goldman Sachs data, the ratio between short and long positions on the VIX has reached its highest level in the past ten years. This indicates that investors are massively betting on a decline in market volatility in the future.

This strategy reveals an optimistic market expectation—investors believe that market instability will decrease. They are willing to short sell instruments that measure market fear, as if signaling that fear has reached minimal levels and the market is ready for greater stability.

The combination of these three trends—rising leverage, portfolio diversification, and massive VIX shorting—paints a picture of a market in a strong risk-on phase, even as geopolitical realities present ongoing challenges.