Despite the impressive gains, some investments carry risks due to their high premiums relative to underlying assets. For example, Destiny Tech100 Inc. trades at a significant premium to its net asset value. Nonetheless, funds like the Baron Partners Fund have thrived by concentrating on Musk's companies, reversing previous underperformance. The overall market enthusiasm reflects confidence in Musk's influence and the potential for his companies to benefit from the new administration's policies.
Key takeaways:
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- Elon Musk's support for Donald Trump and his appointment to the Department of Government Efficiency have significantly boosted the market value of his enterprises, including Tesla, SpaceX, and xAI.
- Investment funds like Destiny Tech100 Inc. and Baron Partners Fund have seen substantial gains due to their holdings in Musk's companies, with Destiny Tech100 Inc. surging over 500% since the election.
- Cathie Wood's ARK Innovation ETF and ARK Next Generation Internet ETF have also benefited from the "Musk trade," experiencing significant gains post-election.
- While Musk's companies are thriving under expectations of favorable policies from the Trump administration, some investment vehicles are trading at high premiums, posing potential risks.