4 Ways the Musk-Trump Clash Could Shake Up Your Investments
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'I've watched my tech investments swing wildly since Elon started this whole Twitter saga,' finance expert Andrew Lokenauth with Be Fluent in Finance said. 'The Tesla stock in my portfolio dropped about 65% — and honestly, it's been a mess.'
The feud started when Musk bashed Trump's controversial new bill, and called out Republicans supporting it. On X, he wrote, ' I'm sorry, but I just can't stand it anymore. This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it.'
In a June 7 interview with NBC News, Trump said he does not wish to repair the relationship with Musk and has no plans of talking to him. 'I'm too busy doing other things,' he said. 'I have no intention of speaking to him.'
The fallout continues to impact investors. Here's how their clash could affect your investments, according to finance experts.
As a result of the bad blood between Musk and Trump, Tesla's value fell $152 billion, per CNBC. According to Lokenauth, Tesla isn't just a car company anymore — it's Musk's personal brand, and that's a problem because he's losing credibility after the spat.
'I've trimmed my Tesla position by about 75%, he said. 'The company's still solid, but the stock price swings are just too wild and most of my conservative clients have completely exited their positions.'
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When powerful figures collide, financial backlash can happen, and some are predicting the renewable energy sector is at risk.
'If Trump's policies lean heavily toward traditional energy and Musk publicly pushes back, investors might see wild swings in companies like Tesla or SpaceX's partners,' said Danny Ray, founder of PinnacleQuote 'The Life Insurance Experts.'
He added, 'If you're holding stocks tied to either camp, it's smart to tighten your strategy and stay nimble.'
It's not just Tesla stocks investors should look at. According to Lokenauth, tech is down across the board due to Trump and Musk's conflict.
'The tech sector's getting hammered from multiple directions,' he said. 'My tech-heavy clients have seen their portfolios take serious hits.'
He explained, ' When you've got two massive personalities like Musk and Trump battling it out in public, it creates uncertainty — and markets hate uncertainty. I've started shifting some of my clients' assets toward more stable value stocks, which has been working pretty well so far.'
Investing in X (formerly known as Twitter), Facebook (part of Meta) and other social media platforms was lucrative, but according to Lokenauth, investors should look elsewhere right now for a return.
'Speaking from experience handling social media stocks, Twitter's chaos is spilling over to other platforms,' he said. 'Meta's down and Snap's worse, so I've completely restructured my approach to social media investments.'
He explained, 'These companies are dealing with falling ad revenue, and the Musk-Trump situation isn't helping.'
While investors wait out the tumultuous period, there are other opportunities to take advantage of. Defense is one area Lokenauth suggests.
'I've moved about 30% of my tech allocation into boring old consumer staples and utilities — they're not exciting, but they're stable, he said. In addition, he added dividend aristocrats — companies that have increased dividends for 25 plus years straight to his strategy.
'These moves have cut my portfolio volatility almost in half,' he explained.
Another method Lokenauth recommended is REIT (Real Estate Investment Trusts) — companies that operate or own real estate that's income producing.
'REITs have been performing surprisingly well — they're up about 15% in my portfolio,' he said. 'These sectors tend to ignore the social media circus completely.'
While Lokenauth believes the impact this high-profile clash has on the market will pass, the best approach is staying diversified.
'I'm keeping about 40% in broad market ETFs, 30% in value stocks, and the rest split between alternatives and cash,' he said. 'It's not exciting, but it's helped my clients sleep better at night while this drama plays out.'
Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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