the presidential election (i)

In the opening scenes of a popular new TV show, Designated Survivor, the leading lights of the Washington political establishment are all blown to bits during the State of the Union address–leaving Tom Kirkman, a nerdy, ineffective, Everyman political outsider as the new President.  We assume Washington will gradually learn that Kirkman will channel his inner Jack Bauer and put the Federal government back on the right track.

I think the acceptance of this fantasy reveals how deep the popular mood of dissatisfaction with a corrupt and dysfunctional Washington is.

Although the Democrats have traditionally had a strong presence in Hollywood, they don’t seem to have noticed what’s going on.  They’ve nominated Hillary Clinton, perhaps the ultimate conventional political insider, for President.  I’ve heard her say virtually nothing that addresses this discontent.

In contrast, the Republicans have opted for political neophyte Donald Trump, who is promising to “Make America Great Again,” as their candidate.

As I understand him (read:  to the degree he has a coherent economic message), Mr. Trump, the P.T. Barnum of our age, is saying that he wants to return the US to the 1950s or 1960s, when the country was the only superpower in the world.  We also had the only industrial base not ravaged by war; protectionist legal barriers prevented many of the foreign products there were from entering the US.   Change occurred only slowly, so jobs were for life.  The women’s movement had barely started.  Landmark civil rights legislation hadn’t been passed.  There was no internet, no personal computers, no smartphones.

Turning back the clock is a pipe dream, in my view.  Trying would create economic decline, not prosperity.  But studies I’ve read suggest the Trump platform resonates strongly in blue-collar, mostly-white enclaves where the current generation is relatively prosperous but where there is little possible upward mobility for the next.


I normally don’t write about politics.  That’s both because in my thirty+ years in the stock market, politics really hasn’t mattered much for equity investors.  In addition, the investors I’ve know who have spent the most time on reading the political runes have generally been the least successful at making their portfolios grow.  Better to study industry dynamics and company financials and leave Washington to play out as it may.

I think this year is different, though.  Although many seem to have framed this election as being a choice between the lesser of two roughly equivalent evils, I think that this is far from the case.  It seems to me that Hillary is clearly a superior choice to Donald.

How so?

a checkered business career

As far as I can see, Donald Trump is not the successful businessman he portrays himself as being.

He was born into a wealthy and successful real estate family, which supported him financially and with professional advice.  He also launched his own career during a golden age for real estate, driven by falling interest rates and the development of New York as a world financial center–a time when it was hard not to make money.  But, despite his advantages, according to a study cited in Forbes Trump made about half the money the average real estate investor did while taking on more risk.

He was/is a brilliant marketer.  He was undone, however, by being too highly leveraged and by a series of expensive and ill-timed acquisitions, including a white elephant hotel, a money-losing airline and a massive expansion in Atlantic City shortly after Steve Wynn, the mastermind of casino gambling, packed his bags and left–correctly predicting the demise of the NJ seaside resort.

My conclusion is that the legend of financial success is mostly the result of Trump’s skillful self-promotion and of the backstory created for the hard-nosed business character Trump portrayed for fourteen seasons on The Apprentice and The Celebrity Apprentice.


More tomorrow.





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