This morning we would like to provide you a brief update on the broader stock market, and specific updates about some of the moves we have been making. On the broader market, we continue to see market digesting October's gains very well here, and holding on to near all-time high level. The charts of all 4 major indices (S&P500, Dow Jones Industrial, Nasdaq, Russel 2000) show strong momentum, further indicating we have a good set-up going into year's end. The volatility index (VIX) is also behaving accordingly, meaning staying at depressed levels (it's important to watch when the market goes up but the VIX goes up with it as well). We don't own major indices, but our individual names are in the indices so major moves at the index level will certainly affect individual stocks.

Recently we've made the following moves:

1. Exit out of PayPal (PYPL) entirely, taking a 18% loss in this position (position was about 6% of our portfolio). We just don't see the growth in the company at this time, and staying in the stock at this level would mean we're hoping for some growth in the future. We believe that capital would be better spent elsewhere.

2. Adding to Ford (F). We used some of the capital from the PayPal sale to add to our position in Ford. We took some off above $20 level, and for the past week the stock has been consolidating around the 19$ level, showing strong buying pressure at $19, so we have decided to buy back some of the stocks we sold higher. We also wanted to add some shares back because Ford is giving 10 cents per share in dividend for shareholders of record at the close of November 19th. Below we will write some recent news catalyst that could drive shares higher in the near term.

3. Adding to banks (MS, JPM, WFC). As written in a recent post here about positioning for 2022, we used recent weakness in the financials sector to continue to build up our position in Morgan Stanley (a subscription-based revenue model), Wells Fargo and JPMorgan (interest-rate sensitive banks). With PayPal out of our portfolio, we're allocating 5% for MS, 5% for WFC, and 3% for JPM.

Electric Vehicle Incentive - Biden's Build Back Better Agenda

In his administration’s latest push towards electrification of automobiles, President Biden is proposing money incentives for electric vehicle purchases (in addition to the current federal tax credit).

However, the proposed EV incentive is going to be specifically huge for Ford (F) and General Motors (GM). How is that? According to the proposal, if you buy vehicles from non-unionized automakers (Tesla, Toyota, Lucid, Rivian, to name a few) the credit is $7000. But if you buy from unionized automakers (currently only F and GM) then the credit is $12500. The $5000 extra is a huge enough difference that can sway buyers towards F and GM, and given the strength of their brands (think the popularity of the F-150), we believe F and GM will be winners of the EV race.

The non-unionized automakers are saying, why so unfair? We think this is a political move from the Biden administration, given that F and GM are locals of Michigan (a swing state), and most of their plants are in other swing states such as Ohio, Indiana, Iowa, Michigan. If F and GM do well, the economies in those states will do well, and Biden (Democrats) will do well. Tesla is in California, a forever-blue state.

Altogether, given the underlying product strengths of F and GM, now adding the clearly biased support from the government, we believe they are going to be clear winners of the EV race. Crucially, their discounted valuations give investors a solid, low-risk and high-reward investment for the future.