By Todd Gordon | InsideEdgeCapital.com
My wife and I live here in Saratoga Springs, NY, and in about an hour we’re heading over to the Belmont Stakes — the third and final leg of the Triple Crown — to meet friends and clients. It’s one of my favorite days of the year: great energy, great people, beautiful setting. But I’ll tell you something: I’m not much of a gambler. I fund my NYRA betting account with maybe $500 a year, and honestly, I don’t really care if I win or lose it. It’s entertainment money. I know people who made a million dollars in horse racing- by starting with two million.
People ask me how I handicap the races. My honest answer: I don’t. Not really. I can read the Racing Form, study the past performances and stats, look at the bloodlines, check the trainer stats, and hit up my famous horse trainer buddy Chad Brown for a tip. All of that is helpful — but I’ve never made any real money betting on horses.
Here’s why: once those gates open, I’m flying blind. I can’t see how the horse is behaving in real time — how it’s handling the pace, the traffic at the rail, the weight of the field pressing in from both sides. Is it moving well through the first few furlongs? Is it getting shuffled back or finding clear sailing? Without being able to watch how the horse reacts to live conditions, I can’t adjust my bet. The race is already running and my money is already down.
If I could watch the first few furlongs and then place my bet — knowing how the horse is handling the actual race-day variables — I’d be a lot more aggressive. But I can’t. So I keep it small and enjoy the show.
Here’s the thing: that’s not how I invest.
Yesterday’s Video: Is It Time to Go Big in Growth?
I posted a video yesterday walking through exactly this question. The Nasdaq has had a monster run — the NDX was sitting approximately 14.4% above its 50-day moving average before yesterday’s big down day. On a daily chart, that’s one of the most extended readings we’ve seen going back to the May 2020 post-COVID surge. Historically, when the NDX gets stretched to that degree, you tend to see at least a pause or a pullback before the next leg higher.
In the video I walked through several charts worth paying attention to right now. On the NDX weekly, the index has broken out of a major consolidation structure and is pressing all-time highs — the broader trend is unambiguously up. But on the daily, that 14.4% extension from the 50-day puts us in rare air, comparable to the extensions we saw at prior inflection points in 2002-2003, 2009, and 2020. In each of those cases the market eventually resolved higher, but not before some digestion first.
The macro backdrop is sending mixed signals too. Jobs came in Friday at 172K versus an 85K consensus — strong on the surface, but prior months were revised down sharply. The CME FedWatch tool shows the market pricing the first cut no earlier than September/October 2026, with rates likely ending the year in the 375-400 range. Meanwhile the 2-year yield is sitting 53 basis points above the Fed Funds rate — a spread that historically signals the market is getting ahead of the Fed on cuts.
I also showed the Growth/Value ratio (VUG/VTV). Growth has been ripping, but the ratio is forming a series of lower highs on a longer-term timeframe, which is worth monitoring. Is value about to rotate back in? The rate picture is likely the key variable.
And then there’s AVGO — Broadcom — which reported earnings this week with extraordinary guidance: AI semiconductor revenue expected to hit $56 billion for full year 2026, up roughly 180% from fiscal 2025, with guidance exceeding $100 billion in FY2027. The stock sold off anyway, breaking below its cup-and-handle pattern. Blowout fundamental news met with a negative price reaction — that’s exactly the kind of market behavior you need to observe before making a high-conviction decision.
Back to the Belmont
Here’s where the horse racing analogy comes full circle — and where investing in stocks is fundamentally different from betting on horses.
You can buy stocks right out of the gate at an IPO — and speaking of which, we’re approaching some of our key clients right now about allocations for three significant upcoming IPOs. But without seeing a stock trade in the public markets, you have no idea how it’s going to behave. That’s the IPO version of betting blind.
Investing in established public companies is a different game entirely. You have access to all the historical fundamental data, analyst expectations, earnings trends, and valuation metrics. But the real work starts after the stock has left the starting gate — sometimes long after. You can watch how the stock behaves alongside all the variables and dynamics the market throws at your position and adjust accordingly. You can size up, size down, or close out the position completely based on what you see in real time.
Imagine if you could do that in horse racing.
Broadcom’s AI numbers are genuinely stunning. The secular tailwinds behind the companies leading the AI revolution are real. But knowing a horse has great bloodlines doesn’t tell you how it’s going to handle a sloppy track with twelve horses pressing in from both sides. The fundamentals give you conviction in the company — the price action tells you whether the market agrees with you right now.
What I’m watching for is how the market behaves from here. Does growth continue to hold up after this extended run? Does the S&P find support and build a new base, or does that lower-high formation in the growth/value ratio start to assert itself? Does the jobs data give the Fed enough cover to cut, which would likely re-accelerate growth leadership? These are the first-few-furlongs questions that matter most.
In the Tactical Alpha Growth (TAG) portfolio update I’ve been working on for the past few weeks — 49 total positions, 12 added, 8 cut — I’m planning a significant move: increasing Technology allocation from 23.5% to 38.5%, a 15-percentage-point jump. That’s a big bet on growth. But we haven’t pulled the trigger yet. I want to see how our horses handle these muddy, volatile market conditions Monday and Tuesday of this week. I’ll be watching with eyes wide open, knowing exactly what I need to see to confirm or challenge the thesis as new data comes in.
That’s the advantage of active portfolio management over passive indexing. Index fund investors participate in the growth trade but can’t adjust their position. Mutual fund investors are largely along for the ride. We can watch how this race develops and respond accordingly — trim if the market tells us to, add more if the internals confirm the breakout.
If you own a mutual fund or you’ve been sitting in cash because you’re not sure how to proceed, you’re essentially betting on a horse without being able to watch how it handles the gate. You’re working off the Racing Form alone.
I’d rather wait for the first few furlongs.
However, in an effort to keep Saratoga beautiful, here’s my bet:
$50 exacta box on #4 and #6. The 4h horse is the favorite and the 6 horse is Emerging Market, trading at 12-1, trained by Chad Brown for Seth Klarman’s stables. If you don’t know how Seth Klarman is, google him. He’s a legendary value investor.
Enjoy the Belmont Stakes today. And if you want to talk about how your portfolio is positioned for what may be a generational opportunity in AI-driven growth, reach out at info@insideedgecapital.com or visit InsideEdgeCapital.com.
Past performance is not indicative of future results. This is not personalized investment advice.
