value and opportunity

´So far, my blog has been 99,9% “Trump Free”. As a German, I haven’t really followed what Trump did and said over the last decades so I think I am not able to form a qualified opinion about him or what he will do as POTUS.

I think it is also waste time to watch TV shows where German politicians debate what Trump will do or not because most of them don’t have a lot of background knowledge either. As with stock analysis, I am a big fan of “Primary resources” and so I decided that I should at least read one book co-authored by “his Trumpness” himself. There are many Donald Trump books out there but the first one from 1987 is “the Art of the deal”. I thought that maybe the first one is also the most authentic one.

The book starts with the description of a typical week of Donald Trump in early 1987. Clearly this is meant as a name dropping exercise to impress the readers about the then not so famous Mr. Trump. Indeed the list is quite long and interesting.

Among other people, Ivan Boesky and Michael Milken were on his list as well as “Ace” Greenberg from Bear Stearns and other really famous people of the 1980s.

The second and larger part of the book is then a typical “how I made it” description of Trump’s early deals.

I have to admit that despite I am not a fan of Donald Trump, the book itself was a good and very interesting read. Why ? Because I think that although he didn’t write it himself, it still gives a very unfiltered view on a 40-year-old Donald Trump who, until then, went from success to success in the 80ies.

These are some notes I made reading it:

 

• he always borrowed (to the max) from the beginning but avoided any personal liabilities
• he had relationships to the Russian ambassador already in the 80ies (planning a luxury hotel in Moscow)
• started dating women via an “exclusive club” but complained that the women were not “classy” enough for him
• Argues that he always acts according to his “Gut feeling” and doesn’t have a “great plan”
• Clearly is aware that exaggeration and aggressiveness are his strengths
• “Conned” himself into his early projects
• but: he is persistent and took a long view at least for properties he wanted to own
• has significant experience in dealing with politicians who he doesn’t like
• He complains a lot about those critics who criticize him. He asks: Why can’t I criticize the critics ? For him, the discovery of Twitter where he can criticize anyone must have been a fantastic experience
• even in 1987 he complains that the Japanese are “stealing” from the Americans because they have such a positive trade balance. This seems to be one of his fundamental believes which hasn’t changed over the last 30 years
• Explicitly says that “controversy” is a great (and cheap) tool to get attention and promote his causes (in that case his luxury apartments). So everything what happened before the election should not have been a surprise
• Doesn’t like committees and hates consultants (McKinsey)
• there was nothing racist in the book
• tried his luck as corporate raider at the stock market with Hilton and Bally, but didn’t follow through and cashed in after relatively short time
• thought that Casinos were easy business and invested a lot in Atlantic City which in the end didn’t work out well
• tried to build a competitor football league to the NFL but failed
• he was always very family oriented. Somewhere he says that you can trust no one but family. His brother was a senior guy in the company and his wife Ivanka was put in charge of the Atlantic City casinos
• he didn’t think very highly of Ronald Reagan

 

In describing his deals one can see certain patterns that for him are most likely the “Art of the deal”:

• he always exaggerates his own abilities or the characteristics of his properties to the max
• He aggressively badmouthes competition / all others
• does really  everything to get an advantage (last-minute changes when the boss of the opponent is already travelling, puttin homeless people in free appertments etc.)
• pushes everyone to the lowest limit (until it hurts)
• He has no respect for people who don’t stand up against him

In short: He tries to be the biggest bully at the table.

Funnily enough he has used “letters of intent” to secure him very cheap prices on real estate in 2 cases but later advises anyone to “never sign a letter of intent in New York” because it will kill you.

In another passage he describes a guy as a “bully”and then says a bully can only be a bully against people who don’t stand up against the bully. Indirectly he implies that he is not a bully but that also could be some inside joke.

Interestingly at some point he says that in a good deal there has to be something in for both parties of the deal but I am not sure if this is his highest priority.

What can we learn for the future (the next 4 or 8 years)

If we look at his most recent comments about the EU and the NATO for instance, one should not be surprised. For him this is “the art of the deal”: First he says NATO is useless and then he will try to get his “deal” , most likely the NATO member paying for  “security”. The same with the EU or China. By talking up Taiwan or predicting the end of the EU he wants to divide his opponents in order then to secure some preferential deal for the US. I think he also clearly understands from his real estate background that you need to rule by dividing your opponents.

It will be interesting  to see how he will behave against the nationalistic forces in Europe but my guess is that he will support them in order to weaken his “deal counterparts”.

However one thing everyone dealing with Trump should avoid: One should not underestimate him. It seems to be that early in his career many people underestimated him because they thought he just has a big mouth. But at least from the book it seems to me that he is quite persistent, has a good memory and also seems to be able to attract and motivate good people who work for him,

If his goal is to bring back jobs the US and roll back the trade balance deficit, I guess he has a good chance to reach this goal. The big question is of course if that really “makes America great again” or if he creates a lot of other problems (high interest rates, inflation, global issues). Honestly, I also don’t see that his policies are necessary good for all stocks but that is maybe a different topic

Summary:

In any case, no matter what one thinks about Donald Trump, I think this is a very interesting book. It gives good insight on how a 40-year-old Donald Trump thought about things, how he negotiates and how bad New York looked in the 7oies in early 80ies. It is also an interesting insight into the real estate business.