• SOFI stock had a blisteringly strong day to end last week.
• Insiders are buying but the ultimate decider is the Federal Reserve.
• SOFI could be a speculative bet but a cautious approach is still prudent.

If you like to drive on the fast lane even on roads where you know the police are just waiting to flash their lights, you might want to take a look at SoFi Technologies (NASDAQ:SOFI) stock. Since late January of last year, SOFI stock teased and tantalized investors, only to leave them bitterly disappointed. But could the speculating type finally win out with the financial technology specialist?

Certainly, recent price action suggests that the bulls may be finally taking control of SOFI stock. On the Friday March 18 session, shares closed up nearly 11% higher from the prior session’s close, a staggering improvement. Over the trailing week, SOFI is up 17%, suggesting that those taking bearish bets on the fintech firm might want to exercise much more vigilance.

But perhaps most enticing of all, SOFI stock entered the public market via a reverse merger with a special purpose acquisition company. As is typical for SPACs, SoFi’s initial offering price was $10. So, even after the near 11% skyrocketing, SOFI as I write this is a few pennies shy of $10.

It’s quite a time-capsule opportunity but will lightning strike twice?

Insiders are Buying SOFI Stock

Over the last several months, a few publicly traded companies have crossed my radar where I’ve issued some not-so-pleasant opinions. One of them is Palantir Technologies (NYSE:PLTR). Never short of controversies, the primary reason I’ve been skeptical about PLTR recently is insider selling. Of the transactions that have been occurring, Palantir executives have been wanting to do nothing but exit their holdings.

Personally, I believe actions speak louder than words. So, I don’t need to tell you not to buy PLTR. Its executives are doing a bang-up job of that already.

But what about the opposite? What if insiders are buying shares? Well, that’s the circumstance we have with SOFI stock.

Despite my hesitation with SOFI stock, I can’t disagree with InvestorPlace assistant news writer Eddie Pan, who stated the following: “Insiders may sell stocks for a variety of reasons, whether it be for personal expenses, tax expenses, or a loss of faith in the company. However, there is only one reason why insiders buy stock in their company: They believe it will go up.”

With all but one transaction being a sell among executives and key employees since December of last year, it’s a good bet that the people closest to the business believe the selloff in SOFI stock is overdone.

Is it reason enough to buy shares? If you’re a speculator, you shouldn’t entirely dismiss it.

The Caveat to SoFi Technologies

As much as I appreciate that SoFi’s management team believes in its business, I also can’t let this positive emotion detract from the many challenges the business faces. Therefore, I caution the above by mentioning speculators. If you’re a risk-averse investor, you’re going to want to approach SOFI stock conservatively.

That’s because the business may not be entirely under the control of management. Frankly, fintech firms, with their riskier profile compared to traditional financial firms, are dependent on the Federal Reserve, among other macro catalysts. As you might guess, I’m not getting a great read on the inflation problem.

Rising costs represented a significant problem prior to the Russian invasion of Ukraine. Following the disruption to the modern global order, costs have accelerated higher. In response, the Fed raised interest rates for the first time since 2018. However, it’s going to need to do a lot more.

Like it or not, the dramatic unprecedented increase in the money supply is a matter that must be addressed. In my opinion, the Fed must attack the money supply just like former Fed chair Paul Volcker did — but because the increase has been so dramatic, the hawkishness must take on gargantuan proportions.

That means seriously risking a recession to prevent our monetary situation from spiraling out of control. Of course, a recession would not be conducive for SOFI stock.

The Bottom Line

If you’re a Las Vegas regular, you might want to take a shot with SOFI stock. After all, projections are basically opinions with numbers. They might pan out or they might not. What’s an actual fact is that SoFi’s insiders believe the worst is over. That’s well worth its weight in gold.

At the same time, our economic recovery is rather fragile. And we can’t just ignore the damage that the pandemic imposed, both on the nature of the economy as well as our monetary stability. For conservative investors, you might still want to wait for a better read.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.