r/WallstreetWhales • u/Anoncry66 • 13h ago
DISCUSSION goldman sachs just dropped a wild chart on s&p 500 negative beta levels (highest since 2000)
saw this research note from goldman's christian mueller-glissmann in ft today and it’s pretty wild.
almost 45% of s&p 500 stocks now have a negative beta. basically half the index is actively moving in the complete opposite direction of spy while headline numbers keep hitting aths.
the last time we saw a spike like this was literally at the peak of the dot-com bubble in 2000.
everyone is watching spy green days thinking the whole market is fine, but under the hood top 10 big tech are basically disguised as the entire economy while 200+ companies are slowly bleeding out.
feels like this divergence can’t go on forever. curious if anyone else is rebalancing into cash/equal-weight or just riding nvidia till it snaps?
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u/pistoffcynic 13h ago
I went to 60% cash and cash equivalents at the start of October. I didn't like the charts I was seeing in comparison to 2008/2009. Add in the uncertainty over the 2026 elections in the USA, I was more comfortable going this route than leaving it in. So far, everything I have sold has dropped below my selling price.
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u/Anoncry66 13h ago
cash is a great short-term optionality play for the initial crash, but sitting in fiat long-term comes with its own silent tax. if this unwind is triggered by systemic energy bottlenecks and fiscal debt monetization, inflation stays sticky. cash protects against immediate equity drawdown, but the ultimate pivot has to be allocating into hard assets/commodities before energy-driven inflation erodes purchasing power.
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u/Pndapetzim 11h ago edited 11h ago
My own read is that in some respects this chart is showing what an AI take-off should show: AI firms eating everyone else's lunch and returning huge gains against those left behind. If that's what you're expecting, that's just confirmatory data.
But it's not clear the productivity boom is actually manifesting, there's been some signs of broadening productivity/margins the last quarter, but they were tiny. My best read is they need to see increasing productivity/ROI improvement across uptakers of AI services across the broader economy before the end of this year otherwise I don't see much immediate future.
Two things make it worth watching with an open mind
- Last year is where I'd say AI got to the point it was really, properly, useful for some limited human directed tasks - everything before that, imho, was really just helping look stuff up and novelty toy-applications not suitable for much business use. Mid-last year agentic models crossed into the territory they could be used with modest oversight to accomplish significant tasks that required significant time and some degree of training for humans to do with decent reliability.
They were also expensive as shit.
2) Really the last 6 months is the first point where I've seen AI capability that properly impresses me and since September we've seen models that expanded that capability while doing so much, much cheaper. Businesses have to validate all this stuff, so adoption is lagging the tech curve significantly - and the reports from firms that were spending ridiculous amounts on compute with little to show for it suggest that profitability will actually take longer as firms figure out how to efficiently manage these new technologies. But I would say: the direct value-potential is there and growing.
The biggest question over the last 6 months is, can the open weight models match the cross-domain capability of frontier agentic systems. Some early reports I've read suggest that while their individual models are solid, they appear to be struggling to match the agentic capabilities of OpenAI and Anthropic - we'll know in their next releases how true that is. If they can, even if the frontier firms deliver systems that deliver radical growth it's unclear they'll be able to command the margins they need to justify all the money they've borrowed.
I'm sitting on around 60% cash myself right now, waiting to see which way the wind blows on this over the next few months. Good quarterly earnings, with detectable ROI improvement across the board this quarter would convince me this AI push might have legs and be worth deploying at least some of that cash while waiting for additional confirmations. No or insignificant growth would probably cause me to pull what little I have left from the AI sector and star reassessing my emergency options.
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u/WackHurst 6h ago
There is one problem with that strategy. The stock prices might outrun you BEFORE you even realize the sustainability of the earnings. People think that they are able to time the event of the reentry but in reality they miss the train because insiders know about it a lot earlier.
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u/Calm_Stress3334 9h ago edited 9h ago
Someone explain this like I’m fking 5. Zig zag beta negative offset…
Non finance jargon please.
Edit. Got the ChatGPT answer. Basically… large companies lead market. If they go down market goes down… chat doesn’t mean bubble is bursting.
There are three separate claims here: Plausible: The market's performance may be increasingly dependent on a relatively small number of very large companies. Worth monitoring: The unusual number of stocks moving differently from the index may indicate a significant shift in how the market is behaving. Not established: That a crash is imminent, that half the companies are dying, or that investors should immediately sell their stocks. The Reddit post takes the first two points and uses them to imply the third.
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u/Crunch101010 3h ago
Just another way of saying that the ~40 AI stocks shot up over the last 3 months while everything else is down. That doesn’t mean every stock is in a bubble.
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u/HBCTIA 13h ago edited 3h ago
The only way, IMHO, to square all of this is to frame the Bubble Question as a specifically Earnings Bubble Question.
I don't know (nor would I hazard a guess) as to the answer (although, given, inter alia, Ed Zitron's work here, I am sceptical, albeit constructively sceptical, of the business case for generative 'AI').
However, as forward PE has come down as the market (SPY / QQQ) edges new ATHs; I really think if it is a bubble then it is one in reported earnings, and not in the multiple, so quite unlike in 1999-2000 (in particular for the Nasdaq 100).
So perhaps preferable to ask "are a handful of companies skewing the E in the PE and, if so, then are those Earnings economically real and sustainable?"
Like I say, no idea of the answer, but I do think that's a better question than asking if the market is in a bubble, or is it over concentrated / lacking participating breadth or is it 'over valued' (multiple wise)?