With Steven Goldberg, Investment Advisor, Writer for Kiplinger.com
We may not have his tax returns or a valid report on the state of his health, but we do have some idea as to how Donald Trump invests.
Steven Goldberg of Kiplinger.com has gone digging into Trump’s investment strategies and wrote an article about his discoveries called "How Donald Trump Invests Outside of Real Estate."
Aside from his real estate holdings, it appears that Donald Trump loves junk bonds. These lower-quality bonds carry with them the substantial risk that the person borrowing the money won't be able to pay it off. His financial disclosure report, which he was required to file since he’s a Presidential candidate, revealed that he has millions, but not billions, in these stocks and bonds. It’s estimated that, outside of his real estate positions, he has about $114 invested in other asset classes.
Trump has boasted that he’s worth $10 billion, although Forbes has said it’s more realistically around $3 billion. Whatever number is closer to the truth doesn’t matter; it’s still a huge sum to have such a comparatively small amount invested in stocks ad bonds. Relatively speaking, it’s just not very much.
As for his overall performance in the market, assuming there are no trades in his portfolio, Steven assesses that as mediocre, coming in a little under 6%. Comparing that to the S&P 500, “he would have lagged pretty dramatically.” But adding in his real estate holdings, he may have matched the return of the stock market.
Steven acknowledges that at Kiplinger there is a preference for stocks over other types of assets because they’ve produced better results over time than any other investment, but volatility does keep some investors away. That’s a valid fear for most people in retirement who should have no more than 50-60% in stocks, according to Kiplinger.
Steven’s investigative efforts into Trump’s holdings also show his fondness for hedge funds, the riskiest kind of junk bonds, with which he has several big positions. These are companies that are near or going through bankruptcy. Having called himself the King of Debt, he’s certainly fishing in familiar waters, which is actually a good thing.
Understandably, for a man who deals in the world of brick and mortar, the intangible aspect of the stock market has less appeal and may even suggest a lukewarm level of interest. He has 45 positions that are worth less than $1,000 and another 35 worth between $1000 and $10,000 and holds these among four brokerage accounts.
What Steven found most surprising was the unnecessarily high fees in his mutual funds. Also, in total, he has 151 positions in stocks, 101 in mutual funds, and 85 individual bonds, spread so widely that no one could keep track of it all.
It seems disorganized, and, quite frankly the portfolio looks like a mess, but not having the inside knowledge of who his brokers are, we can only speculate.
Read The Entire Transcript HereCollapse Transcript
Steve Pomeranz: Hey. Wonder how real estate mogul, Donald Trump, invests his own money when he's not investing in real estate? Well, Steven Goldberg from Kiplinger is here, and he did a little digging to come up with some surprising answers. Hey, Steven. Welcome to the show.
Steven Goldberg: Glad to be here.
Steve Pomeranz: When it comes to investing outside of real estate Donald Trump takes big risks, but not with stocks, you say. What does he actually do?
Steven Goldberg: He loves junk bonds. I was surprised at how so scatter shot his investments were. They were kind of all over the place, but the thing he emphasizes the most is junk bond...
