Title: The Unusual Uptick in Investor Risk Appetite: A Closer Look

A Wave of Optimism Sweeping the Financial Landscape

In a climate where investor risk appetite has been severely depressed for nearly three decades, an unexpected surge is taking place. Is this a sign of euphoria that might signal the start of a new bull market phase, or could it be the last chance to get out before another great crash? Let's delve into the details.

Measuring Risk Appetite: A Comprehensive Approach

Credit Suisse Research has devised an intriguing model called the Composite Risk Indicator, designed to give early warning of major market crises. This system evaluates propensity and potential triggers for a crisis or a period of "good" markets with unusually high Sharpe ratios for risk assets.

Propensity: Valuation, Leverage, and Overvalued Asset Classes

The model focuses on three key factors that can increase the propensity for a major bad market episode: significant overvaluation of one or more global asset classes, abnormally high real economy or high financial system leverage, and risk appetite euphoria. Conversely, positive signals are generated when these factors are absent or reversed.

Current State of Propensity: A Mixed Picture

While US Credit Risk Appetiture has soared into the euphoria zone and is at a 10-year high, other measures of risk appetite remain subdued. Global Risk Appetite, for instance, remains below the euphoria zone but is above its early 2012 peak. This suggests a somewhat optimistic yet cautious outlook among investors.

The Impact on Portfolios: Opportunities and Risks Ahead

What does this mean for portfolios? Investors may want to consider specific assets like C, EEM, GS, BAC, and MS in their investment strategies. This could be an opportune time to rebalance portfolios and take advantage of the current market environment while being aware of potential risks that might arise.

The Road Ahead: What to Expect

As we move forward, it's essential to keep a close eye on global growth, which will ultimately determine whether this uptick in risk appetite heralds a new bull market phase or the start of another market downturn. It's an exciting time for investors, and making informed decisions based on the latest data and analysis will be key to success.