To The Moon

On Thursday, 05 June 2025, we have seen how the ongoing public feud between Elon Musk and Donald Trump intensified dramatically.

I would say this is going to have significant implications for the broader tech sector, especially for companies with substantial ties to government contracts or that operate in politically sensitive areas.

In this article, I would like to share my analysis as my long term portfolio is pretty tech-heavy with names that depends on government contracts for better performance.

The ongoing feud between Elon Musk and Donald Trump introduces a new layer of political risk for investors, particularly those with tech-heavy portfolios. While diversification is always key, this situation highlights specific considerations.

Here is how I will be planning to navigate my portfolio.

Assess and Mitigate Direct Political Risk

Evaluate Exposure to Government Contracts/Subsidies

Identify Vulnerable Companies: Go through your tech holdings and identify companies that derive a significant portion of their revenue or growth from government contracts (like SpaceX with NASA/DOD, or certain AI/cybersecurity firms) or government subsidies/incentives (like EV manufacturers benefiting from tax credits).

I would think $Palantir Technologies Inc.(PLTR)$ could be hit with this as we can see from Thursday, when PLTR drop by 7.77% after reports that republican lawmakers are raising concerns about the Trump administration's work with Palantir Technologies (PLTR) to aggregate large amounts of government data on Americans.

Quantify the Impact: For these companies, try to estimate the potential financial impact if such contracts or subsidies were reduced or revoked. For Tesla, for instance, the potential early expiration of the $7,500 EV subsidy is a direct hit to its profitability.

Considering that chips are largely used in EV, I would think that the next companies most likely to be hit would be $NVIDIA(NVDA)$ $ARM Holdings(ARM)$ , these two have Tesla as one of its important customer, so I will be monitoring and see how the orders might be affected as well.

Diversify Within Sub-Sectors: If you are heavily invested in, say, the EV sector, consider diversifying to companies less reliant on direct government incentives or those with strong international sales that could offset US policy shifts.

While I am invested in the EV sector, but we need to consider how other tech companies, like the chip makers complement the EV sector, so there would be impact when one is affected, correlation is good at times, but we need to strike a balance.

Scrutinize CEO Political Activity

"Key-Man Risk" Amplified: The Musk-Trump feud starkly illustrates "key-man risk" – where a company's fortunes are heavily tied to one individual. When that individual engages in highly polarizing political activity, it adds a new dimension of risk.

Assess CEO Behavior: For your tech holdings, consider how politically active their CEOs are. While some investors might appreciate a CEO's outspokenness, this feud demonstrates that it can lead to direct financial pain. Companies with less politically prominent or controversial leadership might be seen as "safer" in this environment.

Impact on Brand and Sales: Beyond government contracts, a CEO's political alignment can alienate a segment of the customer base. While hard to quantify, this can silently chip away at market share over time.

Monitor Policy Developments Closely

Follow Legislation: Pay close attention to any proposed legislation that could impact tech companies, especially those related to subsidies, tariffs, or regulatory frameworks (e.g., AI regulation, antitrust). The debate around the budget reconciliation bill and EV tax credits is a prime example.

Anticipate Regulatory Shifts: A change in administration or political climate can lead to significant shifts in regulatory priorities. For instance, a Trump administration might be less inclined to pursue aggressive antitrust action against Big Tech but more inclined to challenge clean energy initiatives.

General Portfolio Management Strategies for Tech-Heavy Portfolios

Diversify Across and Within Sectors

Beyond Tech: While it's a "tech-heavy" portfolio, ensure you have exposure to other sectors that might be less susceptible to political headwinds or have different economic drivers (e.g., healthcare, consumer staples, industrials, utilities).

Within Tech: Even within tech, diversify beyond mega-cap growth stocks. Consider: Value Tech: Companies with strong fundamentals, profitability, and reasonable valuations, perhaps those that are more mature and less reliant on speculative growth.

Different Segments: Diversify within software, hardware, semiconductors, cloud computing, cybersecurity, etc., rather than being overly concentrated in one niche.

I think I might reduce my exposure to Apple and Palantir to move it to Amazon, because the cloud computing demand from commerical corporates should still be growing regardless of any U.S. domestic political feuds.

Global Diversification: Invest in tech companies based outside the US, as they might be less directly impacted by US domestic political feuds.

Focus on Fundamentals and Moats

Strong Balance Sheets: In uncertain times, companies with strong balance sheets, healthy cash flows, and low debt are better positioned to weather volatility and political storms.

Defensible Business Models (Moats): Look for companies with sustainable competitive advantages ("moats") – strong intellectual property, network effects, high switching costs, or significant scale advantages. These moats help protect earnings even when external factors create turbulence.

Pricing Power: As tariffs and inflation remain concerns, companies with the ability to pass on higher costs to consumers (i.e., strong pricing power) are more resilient.

Consider Hedging Strategies (for advanced investors)

Options: For specific large holdings or the broader tech index, options (e.g., buying put options) can provide downside protection, though they come with costs.

Another thing that I have started doing is to do Sell Puts on Amazon.com, as I see potential that Amazon.com could clear higher and maintain its share price above $200.

If we looked at the relative strength and RSI momentum, I believe the bulls are still in control on the daily uptrend, though we are seeing $Amazon.com(AMZN)$ moving sideways, the RS remains at a comfortable level at 77 which could make it having some more room upside.

The bulls might attempt a daily uptrend continuation, and I will see if I can plan to acquire more shares at around $195 or via my option trading.

Short Positions: For highly exposed or vulnerable individual stocks, taking a small short position could potentially offset some losses, but this is a high-risk strategy.

ETFs/Inverse ETFs: Consider ETFs that track less politically sensitive sectors or even inverse ETFs that aim to profit from declines in specific tech segments or the broader market.

Rebalance Regularly

The recent volatility might have pushed our portfolio's allocation out of sync with our target. Regularly rebalance to trim positions that have become excessively large (even if they were winners) and reallocate to maintain our desired risk profile.

I think it is time to rebalance more often and increase the frequency.

Maintain a Cash Position

Having some cash on the sidelines allows you to take advantage of opportunities when market volatility creates attractive entry points for high-quality companies that have been unfairly penalized.

Behavioral Considerations

Avoid Emotional Decisions: The news cycle, especially around political feuds, can be highly emotional. Stick to our long-term investment plan and avoid making impulsive decisions based on daily headlines.

This is important as we should always follow what we have set out to do and maintain the strategy, so I suggest that we could keep a long-term portfolio and a short-term one which we would perform swing trade.

Long-Term Perspective: Remember that market downturns and political controversies are often temporary. For strong companies with solid fundamentals, long-term growth trends often prevail.

Continuous Learning: Stay informed about how political developments could impact specific industries or companies, but filter out the noise and focus on substantive policy changes.

Summary

Navigating a tech-heavy portfolio amidst the Musk-Trump feud requires a proactive and disciplined approach. It is not just about managing market risk, but specifically identifying and mitigating political and "key-man" risks that can have a direct impact on valuations.

The ongoing Musk-Trump feud means significantly heightened political risk for the tech sector, particularly for companies heavily reliant on government contracts or operating in areas subject to policy changes like EV subsidies.

It reinforces the idea that CEO political activity can have very real and damaging financial consequences, pushing us as investors to reconsider our exposure to politically outspoken leaders. The tech industry, which often prides itself on innovation and disruption, will now have to navigate an even more complex and unpredictable political landscape.

Appreciate if you could share your thoughts in the comment section whether you think it is a good time to adjust a tech-heavy portfolio to navigate market uncertainity and also any unforeseen circumstances like the domestic political feud.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.