To The Moon

On Fri, 23 Nov 2024, $Goldman Sachs(GS)$, Global markets MD / analyst Scott Rubner said:

• US stocks could start their year-end rally as early as Friday.

• This as US markets broke out of their post-election malaise and power toward what could be a record year for the S&P 500.

• He has pegged a year-end target of 6,300 points for the S&P 500 as well.

• This as, US stocks are set for a solid holiday season bounce following a week in which the benchmark has gained around +1.3% to take its 2024 advance past 24%. 

In Rubner’s notes, he mentioned:

• US equities have been in a consolidation phase all of last week, which is typical going back to 1928.

• The week (beginning 25 Nov 2024) “should” starts the year-end rally, including some of the best trading days of the year into Thanksgiving.”

• Year-end rally in an election year typically extends into early January 2025 — " before" (typically) fading right before Inauguration Day slated for 20 Jan 2025.

Goldman Sachs data, which track the market's performance from Election Day to the end of the year going back to 1928, notes a +3.4% average gain for the S&P 500.

This year, the benchmark has printed more than 50 all-time highs and added nearly $6 trillion in overall market value and is on pace to deliver the best year-on-year advance in history. 

Stocks bull-market trend is continuing

Many Wall Street analysts are issuing new forecasts for 2025.

They are uniformly bullish on stocks heading into year-end, citing the combined impact of :

• Fed’s interest-rate cuts in December 2024.

• A resilient US economy.

• Pro-growth policy proposals from returning President Trump & his administration. 

Sanctuary Wealth, Chief investment strategist, Mary Ann Bartels sees:

• The gains lasting even longer.

• A secular bull market [and] believes this bull trend has another 5 years.

• The current phase is similar to the period of 1995-2000 and possibly from 1925-1929.

• The mid-1990s as the "first advancement to the Digital Era, where stocks rallied +20% for five straight years, all the while (i) weathering outsized corrections tied to an Asia currency crisis and (ii) collapse of the Long Term Capital Management hedge fund.

S&P 500 Performance into 2025 (forecast)

• For 2025, the S&P 500 will continue its gains with a target range of 7,200 - 7,400 points.

• This will be a +24% gain from last Friday (22 Nov 2024) closing. (see above)

• The longer-term track for S&P 500 (over the back end of the decade) to reach will be 8,000 - 10,000 points.

• This is fundamentally driven by (a) productivity gains from AI and (b) strong US economy, aided by maintaining (i) lower corporate taxes, (ii) lower interest rates and (iii) ongoing stimulus from the Biden administration’s legislation that allows companies to continue to post strong earnings growth.

• Collective Q3 2024 profits for the S&P 500 are set to rise +8.8% from last year to $527.4 billion and are forecast to add another +9.8% over the final three months of the 2024.

My viewpoints : (mine only)

I get weary when Wall Street analysts’ get too optimistic about market rallying beyond 2024.

Are they privy to information about the economy or politics that’s unavailable to most people ?

Is there a possibility that they are leveraging on their past experiences or is this an entrapment?

If we believe them, what should we invest in and benefit from the expected rally ?

After careful deliberation, it would be $SoFi Technologies Inc.(SOFI)$.

Why?

SoFi is a unique company that blends banking and technology. It started as a student loan provider but has since expanded into various financial services.

Plus (+) Points:

• Strong Growth: SoFi has been growing rapidly, adding millions of new members and products each quarter. (see below)

• Profitability: The company has turned profitable and is expected to continue this trend. (see below)

• Diversification: SoFi is less reliant on lending and is expanding into other areas like financial services and technology platforms.

• Valuation: While SoFi's valuation is higher than traditional banks, its growth potential justifies this premium.

What About $Nu Holdings Ltd.(NU)$ ?

To be honest, I wanted to recommend Nu Holdings as well.

However, I am aware of the bias attitude on coverages (or lack thereof) towards non-US based companies.

That is why I selected to highlight SoFi, instead; despite NU being equally remarkable in its performance. (see below)

SoFi vs NU - YTD stock price comparison

• Above are the YTD performances of SoFi and Nu Holdings.

• For better part of 2024, Nu was “better” than SoFi, until of late where their paths crossed, and SoFi overtook Nu Holdings.

• Currently, SoFi is having the upper hand at $15.60 a pop, while Nu has slide recently to $13.91.

Actually, you will be surprised to find a lot of similarities between them.

Similarities.

• Digital financial services: Both companies operate primarily online, offering a range of financial products and services to their customers.  

• Diversified product : They both provide a variety of financial services, including banking, lending, investing, and insurance.  

• Customer experience focus: Both companies prioritize a seamless and user-friendly digital experience for their customers.

• Underbanked and unbanked populations: Both companies aim to serve individuals who may be underserved by traditional financial institutions.

• Rapid expansion: Both companies have aggressive growth strategies, seeking to expand their customer base and product offerings.  

• Technological innovation: They both leverage technology to improve their services and attract new customers.

• US-listed companies: Both SoFi and Nu Holdings are publicly traded on the Nasdaq.  

• IPOs Proximity: Both companies went public fairly closed to each other. SoFi's IPO on 01 Jun 2021 and Nu Holdings 6 months down the road, on 8 Dec 2021.

Now you know why I am torn, recommending SoFi and not Nu Holdings. Still, I give the latter some airtime because it deserves the spotlight too.

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• Do you think SoFi is a stock that you will want to buy into ?

• Do you think Nu Holdings is a “better” alternative, given that $Berkshire Hathaway(BRK.B)$ has a stake in it?

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