Putting politics aside, President Trump is a groundbreaker in the Oval Office. Never before had the American public elected someone with no political or military background in the highest office in the land. Nor had they ever elected a president who was a billionaire.
According to Bloomberg, President Trump's net worth, which is a well-kept secret, rose by 5% in 2018 to about $3 billion. Forbes has previously pegged the president's net worth at between $3.5 billion and $3.7 billion. No matter which estimate or publication you believe, the undisputed fact is Donald Trump is the wealthiest individual to ever hold the office of president of the United States.
Trump has predominantly built his wealth over the years through real estate ownership and investment, and by running a variety of businesses. While these businesses haven't always worked out, the broad-based Trump empire of companies has done quite well, as evidenced by Trump's multi-billion-dollar net worth.
Once upon a time, Trump had a stake in a number of popular stocks
But what you may not realize is that Donald Trump also once owned stock in publicly traded companies. Although investing in the stock market was never exactly his prowess, he did, at one time, have more than $90 million invested in equities and commodities.
How do you we know this? Well, back in May 2016, as part of Trump's requirements as a candidate for president, he disclosed his financial holdings in a Finance Election Committee (FEC) filing. Although the information in the filing doesn't require specifics -- candidates are only required to give a range of value for their investment holdings -- we were still able to get some idea of what companies mattered most to "The Donald." As of May 2016, here were the 14 largest stock holdings for Trump:
- Apple: $600,000-$1,251,000.
- Microsoft (NASDAQ:MSFT): $300,000-$600,000.
- PepsiCo: $150,000-$350,000.
- JPMorgan Chase (NYSE:JPM): $100,000-$251,000.
- McKesson: $100,000-$250,000.
- Nike: $100,000-$250,000.
- Johnson & Johnson (NYSE:JNJ): $100,000-$250,000.
- General Electric (NYSE:GE): $100,000-$250,000.
- Visa (NYSE:V): $100,000-$250,000.
- Gilead Sciences: $100,000-$250,000.
- Celgene: $100,000-$250,000.
- Phillips 66: $100,000-$200,000.
- Caterpillar: $100,000-$200,000.
- Alphabet: $100,000-$200,000.
However, when a candidate wins a presidential election, it's customary for the winner to either sell all equity holdings or place them into a trust. This is done to avoid creating conflicts of interest. In Trump's case, Fortune reported in December 2016 that Trump had sold his stocks.
Selling these stocks has cost Trump millions of dollars
While it isn't clear when, or at what price point, Trump disposed of its equity investments, what is clear is that his decision to run for political office has cost him a tidy sum of money.
Here's how Trump's top 14 stock holdings have performed since May 31, 2016 (through Sept. 10, 2019), inclusive of dividends paid:
- Apple: Up 128.87%.
- Microsoft: Up 173.58%.
- PepsiCo: Up 49.07%.
- JPMorgan Chase: Up 95.66%.
- McKesson: Down 19.39%.
- Nike: Up 63.95%.
- Johnson & Johnson: Up 25.39%.
- General Electric: Down 65.07%.
- Visa: Up 128.43%.
- Gilead Sciences: Down 15.09%.
- Celgene: Down 7.46%.
- Phillips 66: Up 42.39%.
- Caterpillar: Up 96.66%.
- Alphabet: Up 63.92%.
Now, here's a look at what these returns would have translated to in dollars, based on Trump's May 2016 FEC filing (figures in parenthesis represent losses in value):
- Apple: $773,220 to $1,612,164.
- Microsoft: $520,740 to $1,041,480.
- PepsiCo: $73,605 to $171,745.
- JPMorgan Chase: $95,600 to $240,107.
- McKesson: ($19,390) to ($48,475).
- Nike: $63,950 to $159,875.
- Johnson & Johnson: $25,390 to $63,475.
- General Electric: ($65,070) to ($162,675).
- Visa: $128,430 to $321,075.
- Gilead Sciences: ($15,090) to ($37,725).
- Celgene: ($7,460) to ($18,650).
- Phillips 66: $42,390 to $84,780.
- Caterpillar: $96,660 to $193,320.
- Alphabet: $63,920 to $127,840.
Added up, Trump's decision to sell his stocks has cost him between $1.78 million and $3.75 million. Sure, that's not a lot for a billionaire, but it's a pretty big chunk of change to forgo when your annual salary as president is "only" $400,000.
Trump's misfortune provides three great reminders
Then again, Trump's exodus from equities does bring three important reminders to light that all investors should be aware of.
First, understand that great businesses tend to increase in value over the long run. True, this wasn't the case with the likes of General Electric. However, you'll note that most of the companies Trump owned were brand-name businesses that have time-tested business models.
For instance, Johnson & Johnson has three separate operating divisions, all of which bring something to the table that the other segments lack. Meanwhile, JPMorgan Chase is a moneymaking machine, with the best return on equity among the largest U.S. money center banks over the trailing year. Large-cap and megacap stocks aren't going to double overnight for investors, but they usually offer competitive advantages that allow their sales, profitability, and market value to grow over the long run.
Second, hold on to your winners! More often than not, it only takes a couple of really big winners over the long run to create game-changing wealth. Rather than looking for the quick buck, look for businesses that'll continue to dominate their landscape for 10 or more years to come. Microsoft, for example, was an early adopter of cloud services, and its Azure platform has really bolstered the company's growth in recent years. Then there's Visa, which has an almost insurmountable market share lead in the U.S., and a bounty of untapped opportunity in the Middle East, Africa, and Southeast Asia.
Third and finally, understand that you're going to be wrong. Keeping in mind that Trump's expertise has always been with real estate investing, not necessarily equities, it's worth noting that four of his top 14 holdings have moved lower as the broad-based market has moved up. General Electric, which is now focused on aviation, power, and renewable energy, has been abysmal, with its noted 65% decline, including dividends, since the end of May 2016.
Chances are that President Trump will do just fine without up to $3.75 million in added capital gains. However, let his misfortune serve as your reminder that great companies held for long periods of time can be a powerful wealth-building tool.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Celgene, Gilead Sciences, Microsoft, Nike, and Visa. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, and long January 2021 $85 calls on Microsoft. The Motley Fool recommends Johnson & Johnson and McKesson. The Motley Fool has a disclosure policy.