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Financial Freedom

Donald Trump vs. J. Paul Getty: Is It Better to Get Rich or BE Rich?

“Stay with the winners… Invest simply… Be your own financial advisor.” – Donald Trump, How to Get Rich

“The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator.” – J. Paul Getty, How to Be Rich

On July 11 in Las Vegas, I met up with Donald Trump, the current front-runner in the Republican presidential race. He spoke at my big show, FreedomFest, before 2,500 attendees – a record turnout.

For both of us, it was our lucky day (7-11 in Vegas!). Trump’s appearance filled the Celebrity Ballroom at Planet Hollywood, giving me and FreedomFest major media coverage (CNN, Fox, MSNBC, Daily Mail, even Playboy magazine). For him, it was the beginning of his surge in the polls. Now he’s the front-runner, and some polls have him beating Hillary Clinton for the White House. Trump Speaking at Las Vegas Freedom Fest CNN image

What are Trump’s views on investing? Ten years ago, he wrote a practical book with lots of advice on business and investing called How to Get Rich. Most of the book is devoted to making money in business, but he has a few choice chapters on investing wisely.

First, he recommends that you “be your own best financial adviser.” He urges you to watch the financial news and read good financial books and publications, such as The Wall Street Journal and Forbes (I subscribe to both), and make your own investment decisions as much as possible.

Second, “invest simply.” Trump warns you to stay away from Wall Street gurus and hedge fund managers who “make you dizzy with talk of intricate financial maneuverings.” He concludes, “fortunes are won and lost every day in these markets, but as far as I’m concerned, those folks would be just as successful if they ditched their hedge funds and put all their money on their favorite roulette number at the Trump Taj Mahal Casino in Atlantic City.”

According to Trump, a smarter alternative would be to invest “only in products you understand, with people you know you can trust.”

“’The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in his stride.’  “That’s great advice for today, when the market is going through a correction.”Finally, “stay with the winners.” Avoid hot stocks and money managers who have no track record. “Beware of instant stars in the world of finance.”

Trump and I don’t often see eye-to-eye when it comes to politics, but when it comes to investing, we are 100% in agreement with these three grand principles.

In fact, in Trump’s latest financial statement, he proved to follow his own advice. His portfolio of $78 million consists of mutual funds, traditional stocks such as Apple (Nasdaq: AAPL), Bristol-Myers Squibb (NYSE: BMY) and Kinder Morgan (NYSE: KMI), and a small amount in gold.

He made a 20% return over an 18-month period. Not bad. However, he does hold over $15 million in hedge funds.

J. Paul Getty Gets It Right

My favorite book by a veteran businessman is How to Be Rich by J. Paul Getty, America’s first billionaire. The title is more nuanced than the Donald’s. Like Trump, Getty focuses primarily on how he made it big in business. But his chapter “The Wall Street Investor” is the best 16 pages ever written on investing. His best advice: “The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in his stride.”

That’s great advice for today, when the market is going through a correction. “Owners of sound securities should never panic,” he warns. He refers to “Black Monday,” when stocks had their biggest one-day drop in over 32 years – this was May 28, 1962! Getty said it was a great time to buy – and he was right.

Today, nobody remembers 1962 as a bad year in the stock market.

Getty is no fan of “get rich quick” books. He advises, “There has been a spate of ‘How to Get Rich Overnight’ books in recent years [he wrote this in 1965, 50 years ago]. Seasoned financiers and investors laugh at them.”

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He recommends investing only in solid and reputable firms that have satisfactory earnings records and in industries that “cannot help but burgeon as time goes on.”

I’ve been in the world of finance for over 40 years, and I’ve been writing my own investment newsletter since 1980. My formula for success is to invest in good quality companies that make money every year, pay above-average dividends, and have a rising dividend policy. I call them SWANs – “sleep well at night” stocks.

I’d like to think that Getty and Trump would agree.

Here are some of my favorite SWAN stocks in the healthcare, financial and energy sectors that would fit the Getty/Trump category of solid growth companies…

  • Omega Healthcare Investors (NYSE: OHI) is the country’s largest real estate investment trust specializing in assisted living facilities. Given America’s aging population, this stock is a great way to profit. It has a 34% profit margin, sports a 6.8% dividend yield and has increased its dividend 10 quarters in a row.
  • BB&T (NYSE: BBT) is the largest bank in the South. It has a 24% profit margin, pays a 3% dividend yield and is aggressively expanding in the Northeast and the Midwest.
  • Enterprise Products Partners L.P. (NYSE: EPD) is the country’s largest publicly traded pipeline master limited partnership. Despite being down 25% this year, it pumped 15% more volume of oil and gas last quarter, resulting in a 28% operating profit growth rate. It also raised its quarterly dividend again, with a current yield of 5%.

All three are selling at bargain prices.

Good investing,

Mark Skousen

P.S. I’m offering half-off my 4th edition of The Maxims of Wall Street! The new edition mentions more than a dozen new quotations and authors, including Donald Trump and J. Paul Getty. For 30 years, I’ve been painstakingly collecting all the wise old adages, proverbs, humor and legends on Wall Street, based on in-depth interviews with old timers, rare financial books and my own experiences of more than 40 years in the financial markets. They include famous lines from Warren Buffett (“If you wait to see the Robin sing, Spring may be over”)… J. P. Morgan (“Troubled waters make for good fishing”)… Richard Russell (“In a bear market, the winner is he who loses the least”)… and Steve Forbes (“Everybody is a long-term investor until the market goes down”).

The book has been endorsed by The Oxford Club’s own Alexander Green, as well as Warren Buffett, Jack Bogle, Dennis Gartman, Richard Band and Bert Dohmen. Over 20,000 sold! The retail price on Amazon is $24.95, but Investment U subscribers will pay only $20 for the first copy – with additional copies only $10 each. All are personally autographed and mailed to you for free (I pay the postage). For all foreign orders outside the United States, add $10 per book. I’m offering this “half off” deal because I know Maxims makes a great gift for friends, relatives, business colleagues, investors… even your favorite stockbroker or money manager. Many people order a whole box (32 copies). The price of a box of books is only $300 postpaid. As Hetty Green, the first female millionaire, said, “When I see something cheap, I buy a lot of it!”

To order your copies at this super discount, call Ensign Publishing toll-free at 1-866-254-2057, or go to www.miracleofamerica.com/maxims.


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