Goldman Sachs: FOMO sentiment may further boost US stocks

The upcoming U.S. election has triggered anxiety on Wall Street, as can be seen from the Chicago Board Options Exchange Volatility Index (VIX), also known as the "fear index," remaining high. Scott Rubner, Managing Director at Goldman Sachs, pointed out in his latest market commentary that the short-term pullback many investors are expecting or hoping for may never materialize. Rubner expects that U.S. stocks will continue to rise by the end of this year, in line with seasonal patterns. Historical data shows that U.S. stocks typically perform strongly in November and December. If the election leads to anything, it could be a "risk asset liquidation event," causing an immediate market rally as the fear of missing out (FOMO) drives investors to chase gains. In this scenario, Rubner anticipates that the most significant gains will come from currently undervalued and unpopular themes and sectors. However, in the next two months, Rubner believes that the seasonal changes in company buybacks and investor positions may have a greater impact. Firstly, Rubner notes that retail investors and private wealth managers typically adjust their portfolios in January, April, and November. Investors holding Treasury securities may want to reinvest maturing proceeds elsewhere, with the stock market appearing to be a logical investment destination. Assuming U.S. stocks perform as usual, the last two months of this year could be very profitable. Since 1928, the median return of the S&P 500 index from October 27 to December 31 has been 5.2%. In election years, this figure rises to 6.3%. Company buybacks could also drive the stock market higher, as companies are now able to repurchase their shares again. Data from Goldman Sachs' trading department shows that November has historically been the busiest month for such transactions, with over $100 billion potentially flowing into the stock market from buybacks alone. As the fiscal year ends in late October, mutual funds and pension funds may also reduce some selling pressure. Rubner also observed that retail trading activity is picking up again in popular stocks like Nvidia and Tesla. If this trend continues, buying pressure may continue to strengthen. After receiving a large number of client inquiries over the weekend, Rubner noted a consistent theme: investors are no longer asking how to hedge against a downturn but are instead focusing on how to best profit before the end of this year. Rubner remains bullish on stocks. Earlier this month, he expressed concerns that his year-end target of 6000 points for the S&P 500 index may not be high enough. The index only needs to rise by 3% by the end of this year to reach Rubner's target