Donald Trump Is a Terrible Investor (According to Donald Trump)

Donald Trump Is a Terrible Investor (According to Donald Trump)

If Donald Trump is telling the truth, his investing track record is abysmal.

Earlier this month, Donald Trump made a required filing with the Federal Election Commission that details his financial activities. That filing came after Trump and his representatives had indicated that the real estate mogul / presidential candidate has a net worth of approximately $10 billion.

This claim is the latest in a long string of estimates made by Trump, family members, business associates, and journalists. These estimates have varied wildly over the years, depending on — among other factors — the source of the estimate. The chart below presents a partial compilation of estimates beginning in 1988 through recent statements surrounding his FEC filing:

Net-WorthData Sources: Various; see references at end of the article.

The obvious trend is the tendency for Trump’s own estimates to top those from third parties such as Forbes, banks, and even wives. But more interesting is the implication that Trump makes about his investing track record.

In 1998, Forbes listed Trump’s net worth at $1.5 billion but noted that The Donald took offense:

Unstoppable salesman, master of hyperbole…now claims our estimate is low by a factor of three: ‘The number is closer to $5 billion.”

Trump now claims that he is worth $10 billion. If it is assumed that his estimates have historically been accurate, Trump’s net worth has doubled from $5 billion in 1998 to $10 billion today.

That initially seems impressive — until the performance is put into context. The S&P 500 gained about 179 percent over the same period, which would indicate that Trump would have been better off liquidating his real estate portfolio in 1998 and pouring it into a low-cost ETF. Like many others, the Trump portfolio has badly underperformed the broad market.

The FTSE NAREIT Composite Index is perhaps a more appropriate benchmark given Trump’s focus on real estate. That index increased by about 374 percent during the same time period that Trump’s wealth grew by 100 percent.

Somewhat ironically, Trump would have been even wiser to put that $5 billion into the MSCI Mexico ETF (EWM). That fund has gained more than 800 percent during the period in which Trump’s wealth doubled. If Trump had invested his “$5 billion” in 1998, it would have grown to more than $40 billion today.

Return-ComparisonData Sources: Donald Trump, FTSE, Yahoo! Finance

These returns aren’t perfect apples-to-apples comparisons since Trump has earned income and incurred living expenses in the intervening 17 years. But any adjustment would not change the conclusion: Trump has either embellished his net worth or delivered poor investment returns.

Data Sources

a. New York Times
b. Forbes
c. Forbes
d. Philadelphia Inquirer
e. Forbes
f. New York Times
g. New York Times
h. New York Times
i. CNN
j. Forbes
k. The Wire
l. Wall Street Journal
m.Wall Street Journal
n. Wall Street Journal
o. Forbes
p. Forbes
q. Comedy Central
r. Forbes
s. Forbes
t. Business Insider
u. Forbes
v. CNN

About the Author

Michael

Michael Johnston is senior analyst for ETF Reference. His investment expertise has been featured in The Wall Street Journal, Barron’s, and USA Today, among other publications.

Leave a Reply

Your email address will not be published.

You may also like these