By Denitsa Tsekova and Alexandra Semenova
It took less than a day for the great Donald Trump-Elon Musk split to reshape debates over billionaire power and influence in American capitalism.
At another level, the breakup was a reminder of something else: the perils of personality-driven investing, a growing and lucrative business for the Wall Street bankers cranking out, rapid-fire, a never-ending array of new financial products. Few have done more to fuel these gambling spirits than the president and the world’s richest man.
In a matter of hours, a loosely connected web of Musk-linked trades — and a few tied to Trump — cratered as the public feud escalated. Dogecoin sank 10%; a publicly traded fund dangling SpaceX exploration for retail consumption slid 13%; leveraged bets amping up returns on Musk-related ventures lost a quarter of their value or more. Shares of Trump’s media company slid.
The spat — ignited by the deficit-expanding tax bill threatening Tesla’s electric-vehicle subsidies — cooled on Friday and asset valuations steadied. But by then, investors had gotten the message loud and clear. “You can go from being an incredible beneficiary one moment and then being bludgeoned the next,” said Peter Atwater, founder of Financial Insyghts. “Anytime you are investing in something that is as crowded as these Elon Musk-related vehicles, you are going to be either the beneficiary or the victim of his standing.”
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