As he loves to do whenever he talks about himself, Donald Trump on Monday told a Colorado audience that all his business success stemmed from “a small loan” from his father ― a virtual Horatio Alger story.
Which would be true ― if, instead of rags-to-riches tales, Alger had written about people who start with massive fortunes and then whittle them away.
Because as rich as the Republican presidential nominee is, his stewardship of the $200 million real estate empire he took control of four decades ago has failed to keep pace with either the general real estate market or the economy as a whole.
Trump has frequently put a dollar amount on the “small loan” he mentioned Monday: $1 million. Democratic nominee Hillary Clinton got under his skin at the first presidential debate last week by using the figure $14 million.
Either number misses a key point. The loan had little to do with the main source of Trump’s wealth, which was the real estate and construction company his father had built over a number of decades.
Trump took over running that company in 1974, at age 28, when it was worth approximately $200 million, according to a contemporaneous New York Times article. The vast majority of Trump’s wealth today flows from that initial nest egg, which he and his four siblings eventually inherited when their father died in 1999.
What’s more, given the size of that original fortune, Trump has actually underperformed both the stock market as well as the real estate market.
Had Trump taken his share of what would become his father’s inheritance and put it into an index fund matching the S&P 500 back in 1974, it would have been worth $3 billion today. Had he put the $200 million that Fortune magazine determined he was worth in 1982 into that same index fund, he would be worth more than $8 billion today.
And had that $200 million gone into the broad real estate market, it would be worth more than $20 billion today.
Trump claims he is worth more than $10 billion, but independent analyses have put the figure at less than half that. Two banks that appraised his net worth a decade ago came up with values of $788 million and $1.2 billion. And journalist Timothy L. O’Brien, author of TrumpNation, said sources within Trump’s company a dozen years ago told him Trump was worth between $150 million and $250 million ― at a time Trump was claiming a net worth of $6 billion. (Trump sued O’Brien over the book for defamation and lost.)
Whatever the precise number, the source of Trump’s wealth, the uncertainty of his current net worth, the recent revelation that he declared $916 million in tax losses in 1995, and his refusal to release his tax returns could eat away at the image he has peddled of himself as a successful multi-billionaire.
Of course, if Americans are looking for an actual self-made multi-billionaire, there is one. Warren Buffett was worth about $40 million in 1974. He’s worth about $70 billion today ― at least 14 times Trump’s net worth.