I Just Can't Help Myself
This is an additional column that I just could not wait until Monday to write.
I apologize if I am sending out too much but this one is stuck in my craw.
I have bees in my bonnet as they say about this latest stupidity in the investment world.
It is the Trump Media and Technology Group scam.
That’s right I said it! It is a scam of untold proportions and I can not believe we are seeing this type of activity in such a thing yet again.
Investing is about growing or protecting your wealth. Accumulating assets over time so you have money for when you need it and you don’t spend it on things you don’t need. It is a multi-multi trillion dollar industry. For good reason.
Advisors, portfolio managers, investment professionals of all kinds are out there trying to make money and protect money for their clients. Yes, a lot of them make a pretty substantial amount of money but they are all there looking for something to invest in. Something that may separate them a little from their peers.
It has had it’s share of scoundrels for sure, what industry hasn’t but if you look at the overall industry, it is an important part of the US economy.
Part of the reason that these people do well is because they do a lot of work their clients never see. They investigate, they run program after program to see what the best returns will be for their clients.
The key factor in making investment decisions for clients, jointly or otherwise, is potential growth. Earnings, market share, and so forth.
I know it is ultimately hard to tell if a company will continue on an expected growth path. You really can’t see what the future is going to look like and be 100% right, too many variables but there are indications of potential success staring most investors in the face.
Which brings me to Trump Media.
How, in God’s name do you value a company that has a negative P/E like this company does? How do you value a company at around 9.5 Billion dollars when it’s revenue barely passed the 8 million dollar mark? It is absurd.
You look at this as a play on Donald Trump and his expertise?
Let’s be real. Forget the political side of Former President Trump, look at his business record, it’s not pretty.
I have a funny story going back a few years.
When I was a broker on the NYSE floor we had an account based out of New York. Small hedge fund, great guys and one day he started shorting the original DJT. I don’t remember the price but he generally would short 10 to 20 thousand shares a day. Apparently, it was not an easy stock to borrow so he had to use his skills to find the shares but eventually he did and he just shorted it everyday. For months.
When the company filled Chapter 11 I called him and congratulated him. He gave me a story about Donald Trump ,the business man. He had hosed several contractors in Atlantic City and fought tooth and nail trying not to pay them. He wore them out and several of those companies went bankrupt. Trump couldn’t care less because he won and he moved on. This guy’s father owned one of those businesses and it destroyed him.
My client said that with his profits he was going to buy a house as close to Trumps original place in Florida and give his father the rest of the money.
So, I have experience with Donald Trump and his affection for being publicly traded. It normally does not end well.
This is meme stock, the company has very little to no value yet the market has valued it at 9.5 billion.
Regarding this, what is the idea here? It’s attached to Donald Trump, I get that and surely there is a little value to the name but if you look at what it will be doing in the future it does not bode well for the company. Period.
New media, old media is not the place you want to put your money. Things are still shaking out in an industry that has been going through incredible upheaval. Yet, DJT has the solution? Give me a break already.
Going back to the financial service industry. I am going to put this out there, if you have advised clients that this might be a good long term investment, please unsubscribe from my column. You are not who I want reading this.
Promote Bitcoin at your own peril but putting your clients in such a worthless piece of garbage as this stock, says more about you than it does about your clients.
A few things to remember. Everything we are seeing is floatation with no support. It can go down as fast as it went up and while you might go Reddit and see all these millionaires minted yet again, at the end of the day they are full of it.
The value of Presidents holdings are all on paper. While they may help him float a loan to deal with his current situations (highly doubtful any bank will use his stake as collateral but who knows) it is meaningless until he has an opportunity to sell. Once the lockup period is over this stock will look exactly like the first stock he listed on the NYSE.
As a side note, I asked a few years later how the house hunting went in Florida. He said he couldn’t do it. He couldn’t be near the guy. Not sure what he is doing now but this guy was a lifelong Republican and who knows if he voted for Trump in 2016 or 2020.