The Hindu Business Line : Investment Nuggets

Driven to the brink of personal and business bankruptcy in 1991, the story of New York real-estate magnate Mr Donald John Trump has ups and downs that are unexpected for someone born with a silver spoon. He is the CEO of Trump Organisation, an American-based real-estate developer, and the founder of Trump Entertainment, which operates several casinos. In the 1990s, in a bid to make his mark, he expanded from real-estate to airline industry and then to the lucrative casino business. With the real-estate crisis gripping the US, the effects of recession left the Wharton graduate handling mounting debt on the one hand and an erratic personal life. After the initial shock, Mr Trump re-structured his debt with help from lenders, ultimately triggering a resurgence in his financial situation and fame. Real estate still remains his obsession. A few investment thoughts from him:

“Well, I see less of a (real estate) bubble than the newspapers do. I think that as long as interest rates remain where they are — now the market is not as good as it was two years ago but it is still a pretty solid market. And if interest rates do not go up too much I think the market is going to be just fine. You need the right location, you need the right product and you have to know what you’re doing.”

“I carefully consider the complete environment — 40 Wall Street is a good example. When I bought the building, everyone advised me to turn it into a residential property. But I did not feel that was such a great idea, and I stuck to my instincts. Today it is thriving as a commercial building with world-class tenants, and I made the right decision. It’s been a sensational success and is worth many times over the $1 million I paid for it.”

“Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you are generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you do not make.”

“Well, the stock market is a very tricky game and I have always said and will say it again, I love real-estate. But when you have people like a Terry Lundgren at Federated who has done, as you know, a fantastic job with Macy’s and Bloomingdales and everything else or Jeff Immelt at General Electric. I think their stock is probably low. It is probably going to go up. I invest in people. I think Immelt is good. I think Terry Lundgren is great. You see some of the people at the Wall Street firms like Bear Stearns, I think that you invest, if you’re going to invest in it, you have to look at the people running the company. But I like real-estate better.”

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