Trump's Business Success not all that Great

[iluvatar5150]

The 1 Easy Way Donald Trump Could Have Been Even Richer: Doing Nothing

As “really rich” as Donald Trump is today, he might have been even richer if, instead of dabbling in skyscrapers and casinos, he’d simply taken his eight-figure inheritance decades ago and sunk it into the stock market.

Had the celebrity businessman and Republican presidential candidate invested his eventual share of his father’s real-estate company into a mutual fund of S&P 500 stocks in 1974, it would be worth nearly $3 billion today, thanks to the market’s performance over the past four decades. If he’d invested the $200 million that Forbes magazine determined he was worth in 1982 into that index fund, it would have grown to more than $8 billion today.

Even the smaller figure exceeds the lower range of his possible net worth as reported to the Federal Election Commission, while the larger number exceeds by billions recent estimates of Trump’s worth by financial publications. And it would have come without the high-drama, roller-coaster career that has included four corporate bankruptcies.

That a purely unmanaged index fund’s return could outperform Trump’s hands-on wheeling and dealing calls into question one of Trump’s chief selling points on the campaign trail: his business acumen.

Trump is rich, because he had a rich daddy.

 

[ThatRobGuy]

Trump is rich, because he had a rich daddy.

I thought everyone already knew that his fortune was the result of inheritance...

 

[AvilaSurfer]

He inherited 10 million, now worth 10 billion. Must be doing something right.

 

[iluvatar5150]

I thought everyone already knew that his fortune was the result of inheritance...

I didn't.

He inherited 10 million, now worth 10 billion. Must be doing something right.

He inherited a lot more than $10 million and he was born into a successful real estate development firm.

 

[ThatRobGuy]

He inherited 10 million, now worth 10 billion. Must be doing something right.

His net worth is 4 billion, not 10...according to Forbes

Yeah, but I would say it's easier for a person to go from 10 million to 4 billion, than it is for a person to go from 10 thousand to 10 million.

If you're starting right out of the gate already having 10 million in your pocket, you have access to far more channels that allow you to make even more money.

With $10 million, you can start businesses with no loans, make investments, etc... all of which have the potential to grow your bank account exponentially. With the rates of return on getting on my current investment portfolio...if I had 10 million to throw at it, I'd triple that in 15 years just on investments alone with no other actions. Now, combine that with the aspect of stepping into a high-level leadership role in a pre-established company with the salary that goes along with that as Donald has...even a person with moderate financial/business acumen could turn those big bucks into even bigger bucks.

With $10 million for startup, you could hit it pretty big simply just investing in rental properties. With no loans to acquire the properties, making even more money off of that would be easy.

If I had that $10 million...(courtesy of a couple of different rental property investment calculators that factor in average costs for taxes, insurance, maintenance, and improvements)
Stuff 2 million in the bank, use the other 8 million to buy rental houses.
Buy a development of 50 rental houses for $150k a piece (avg)
Charge $1,400/month to live in them.

Factoring in a modest home appreciation rate of 3%, and a rental occupancy rate of 80% (obviously you're not going to have tenants in all the houses at all times)

On each home, you'll average about $16k/year new cash flow, and at the end of 5 years, each of the homes' values will have increased to roughly $170k

So, in 5 years, each home has gotten you $80k cash, and $20k in home appreciation. You sell the house at the end of the 5 year period, you essentially just turned $150k into $250k. ($100k net profit)

$100k x 50 houses: $5 million in profit in 5 years. Imagine if you kept that train rolling for 25 years before you cashed out.

Obviously this is a very simple example demonstrating a very single-threaded financial plan, however it was simply to illustrate that when you have a big pile of money going into the game, it's not that hard to make it grow exponentially.

Which has what Trump has done...

If you want to see business expertise...take a look at the guys who started off with next to nothing who are Uber rich now. Those guys know what it's about...

To me, even as a conservative...the only thing Donald has accomplished is winning the birth lottery by swimming to the egg faster than the other swimmers.

 

[AHH who-stole-my-name]

Money doesn't make people rich. It makes the wealthy. It makes them dependant, but only one thing makes a person rich and that can't be bought for any amount of money.

 

[AvilaSurfer]

Message board posters criticizing a billionaire's business success......hilarious.

 

[AHH who-stole-my-name]

Message board posters criticizing a billionaire's business success......hilarious.

It's not his success's that brings him under the scrutiny of others. It's his excesses.

 

[AvilaSurfer]

It's not his success's that brings him under the scrutiny of others. It's his excesses.

Maybe you should re-read the thread. Pay attention to the subject.

*successes*

 

[ThatRobGuy]

Message board posters criticizing a billionaire's business success......hilarious.

I'm not criticizing anything he's done in terms of how he runs his business...nor do I think the other posters are.

Trump was born in New York City in 1946, the son of real estate tycoon Fred Trump. Fred Trump's business success not only provided Donald Trump with a posh youth of private schools and economic security but eventually blessed him with an inheritance worth an estimated $200 million.

I think we're simply in agreement that being a successful businessman isn't quite the grandiose accomplishment when you get to enter the game with nearly a quarter billion (free & clear) in startup funding.

He's essentially taken what he was given, and increased it by 20 times. The total number looks impressive due to the astonishing amount...however, I've increased my net worth by a factor larger than that in the last 15 years (I went from a grocery store clerk at age 16 with $100 in the bank, to a Sr. Software Engineer at age 31 with a net worth over $150k between cash, investments, and assets), does that make me a more successful businessman than Trump?

 

[NightHawkeye]

Trump is rich, because he had a rich daddy.

LOL ... wait, what?

He's a self-made man. You can't count his inheritance which he blew away in bankruptcies.

 

[AvilaSurfer]

Just hilarious.

 

[Rationalt]

His net worth is 4 billion, not 10...according to Forbes

Yeah, but I would say it's easier for a person to go from 10 million to 4 billion, than it is for a person to go from 10 thousand to 10 million.

..

It is far easier to go bust with 10 million in your pocket. If what I read is correct at one time his entire wealth was wiped out in addition to owing 50 million in debt.

He also made through recession throughout the 90's , dotcom burst and real estate meltdown.

I say He was/is spectacular businessman who made remarkable turnarounds.

 

[iluvatar5150]

LOL ... wait, what?

He's a self-made man.

He's not a self-made man. His father owned a successful real estate development firm, at which Donald started working during college. His father put up the money for some of his first deals and more generally, provided huge, stable platform for Donald's future success.

You can't count his inheritance which he blew away in bankruptcies.

He didn't blow it away in bankruptcies. These were business bankruptcies, not personal bankruptcies, and it was only the 1st of these where his wealth was really at risk.

It is far easier to go bust with 10 million in your pocket. If what I read is correct at one time his entire wealth was wiped out in addition to owing 50 million in debt.

From what I've read, that's not correct.

I say He was/is spectacular businessman who made remarkable turnarounds.

Then why aren't his long-term returns any better than the rest of the market?

 

[Albion]

The nit-picking doesn't mean anything. He's clearly a success story and even with a head start made a lot on his own. Live with it.

 

[GoldenBoy89]

Trump is clearly successful or he wouldn't have more money now than he started with. The thing is, he doesn't embody that Classic American, rags to riches story that inspires so many. He didn't come here with $100 to his name, not knowing the language and yet manage to become a billionaire. He's pretty much always been exceedingly rich. As such, he has no connection to the average American. He's never lived in our shoes and has had it pretty nice his whole life. I just can't relate to someone like that and I wouldn't want to be represented by him.

 

[ThatRobGuy]

He didn't blow it away in bankruptcies. These were business bankruptcies, not personal bankruptcies, and it was only the 1st of these where his wealth was really at risk.

You beat me to it

He played the system of crony-capitalism to the fullest. He's started numerous business ventures that have flopped, and been able to walk away with his personal holdings in tact due to various bankruptcy laws. If they would've been allowed to go after his personal holdings to cover losses in a few of those instances, he would've been screwed.

However, like I said, I'm not trying to insult the guy, he still technically worked within the system and made money. I just object to the idea that he's some sort of "business genius whose acumen will save the country".

I would reserve that award for these guys
http://www.bloomberg.com/bw/slideshows/20101123/twenty-billionaires-who-started-with-nothing#slide2

 

[Albion]

Trump is clearly successful or he wouldn't have more money now than he started with. The thing is, he doesn't embody that Classic American, rags to riches story that inspires so many. He didn't come here with $100 to his name, not knowing the language and yet manage to become a billionaire. He's pretty much always been exceedingly rich. As such, he has no connection to the average American. He's never lived in our shoes and has had it pretty nice his whole life. I just can't relate to someone like that and I wouldn't want to be represented by him.

That didn't concern you when it came to assessing the politicians whom you have favored.

 

[Albion]

He played the system of crony-capitalism to the fullest. He's started numerous business ventures that have flopped, and been able to walk away with his personal holdings in tact due to various bankruptcy laws. If they would've been allowed to go after his personal holdings to cover losses in a few of those instances, he would've been screwed.

However, like I said, I'm not trying to insult the guy

Stop! My sides are splitting!

 

[whatbogsends]

Message board posters criticizing a billionaire's business success......hilarious.

Analyzing the success of a presidential candidate, which is largely due to an extremely large inheritance is appropriate given peoples claims that "he's a great businessman, so he'll make a great president". The "great businessman" claim is debatable. His business success is entirely predicated on having started with $40 million in 1974 (back when being a millionaire meant you were rich).

He's declared business bankruptcy 4 times, which means that in 4 instances, his investors took a loss. Fortunately, his "business acumen" allowed him to insulate his personal assets from his business losses, so he has done well, even when he cost other people money.

Realize that declaring bankruptcy is not a viable solution to fixing the economy.