Trump the businessman

Trump says he’s worth $10 billion and that he proved it in his campaign disclosure.

I doubt that.

Forbes does an annual issue in which they list what they call The Forbes 400—the 400 richest people in the U.S.

Forbes and The Donald have a running battle over his net worth. Forbes says it’s about $4 billion. Trump says they’re way low. “Show us the proof,” says Forbes. Donald refuses. The key point appears to be the value of Trump’s name—called “good will” by accountants.  I’ll go with the Forbes estimate, which is still a lot of money.

No personal liability

Donald used to agree to personal liability on his real estate deals. I wrote an article in my newsletter Real Estate Investors Monthly about that. I said it could be a smart thing in some cases. But in my later years, I say, “No way, Jose” to agreeing to personal liability. So does Donald.

Since he had a negative $900 million net worth in the 1990s—which he denied at the time but later admitted in his book The Art of the Comeback—he has quietly switched to not only not agreeing to personal liability, but to merely licensing his name. The more recent Trump buildings are ones he does not own even though they have his name on them. He just gets paid to use his name, like Michael Jordan getting money for Air Jordan sneakers.

I also wrote an article about Donald lately refusing to agree to personal liability in my newsletter. I recommended my readers follow his example.

The pattern of using lots of leverage (other people’s money that is borrowed)—too much—and agreeing to balloon payments in one’s early years as a real estate investor is common and unwise. It is also typical within real estate investment to see investors refuse to agree to either personal liability or balloon payments the second half of their careers. I have written five books on real estate finance. 

So fundamentally, Trump is a typical, albeit above-average scale, real estate investor in terms of being too aggressive in his early years and cautious in his later years. This is typical competence in the business. I would not hold his erstwhile negative $900 million net worth against him. He learned the appropriate lesson from it and he would be a better president as a result. Licensing his name is essentially unique in real estate investment. Don’t try that at home.

His lying about his erstwhile negative net worth, however, I do not accept. That was wrong. That does not commend him as a president, but neither would it make him much different from all his politician predecessors or most of his current opponents. Rubio, for example, voted to continue the sugar tariff which was pure sleaze on his part.

The problem may be that Trump is now in the rookie years of his career with regard to foreign policy, immigration policy, government employee management, military, environment, etc. Not that many of his predecessors in the Oval Office were much different, like Obama, who is a rookie at everything.

Did Trump acquire broader caution than just avoiding balloon payments and personal loan liability? To hear him talk about what a tough guy he would be in foreign policy, one wonders.

You can’t judge him on his policies because he keeps changing his positions from one extreme to the other. Although when he gets serious as he recently did with immigration, he has the smarts and experience to seek out the knowledgeable people and to come up with a more or less sensible plan.

I don’t care for his incessant bragging, but I must conclude he is a very competent, albeit ethically challenged, entrepreneur.

New York City ethics

He has New York City ethics, which is to say, he will do to you what he thinks he can get away with. We in the businessworld know, for example, that when you ship products like a carton of my books to a New York City business like a book store, you can count on them claiming some were damaged and that the carton was short the number that were supposed to be in it. A guy I know hand delivered a carton of his books to a New York City book store and got the clerk to acknowledge the number and that lack of damage.

He later got shorted when the payment arrived. The check was accompanied by a note saying the box was short the correct number and some were damaged. Welcome to Trump’s home city.

Trump admits to various lies and frauds in his books. He seems to think it’s amusing and proof he’s a shrewd businessman. He brags about some on the campaign trail—like buying influence with politicians. I cannot get comfortable with that. After eight years of Chicago politics, I am not sure we want four or eight years of New York City ethics.