ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

Warren Buffett's Decades-Old Critique of Trump's Financial Strategy Resonates Amid $355 Million Fraud Verdict

The recent verdict penalises Trump, his company and executives, and his two eldest sons.
PUBLISHED FEB 23, 2024
Warren Buffett participates in a panel discussion | Getty Images | Photo by Chip Somodevilla
Warren Buffett participates in a panel discussion | Getty Images | Photo by Chip Somodevilla

A decades-old analysis from Warren Buffet, the guiding force behind Berkshire Hathaway has resurfaced in the backdrop of a landmark ruling that against former President Donald Trump. A judge recently ordered Trump to pay $355 million for fraudulently reporting the values of his properties and prohibited the ex-US president from assuming the role of director in any New York-based company for three years. In his 1991 analysis, Buffet stated that “Trump was never right”. 



 

Buffett's insights shared during the series of lectures at Notre Dame in 1991 are preserved on TilsonFunds.com. In his lectures, Buffet described Trump’s overreliance on leveraging and how he went wrong with borrowing as well. He described that Trump consistently overpaid for properties that he bought by borrowing money from people. His assets, what he paid for them, and his borrowings had no real equity in them, Buffet claimed.

“He was terrific at borrowing money,” Buffet said. He further added that at the time, Trump was probably a billion dollars in the hole because of overpaying.

“You don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing,” Buffett said indicating that a conservative approach to finance projects is always better than rapid expansion with increased debt.

In the lecture, Buffet went beyond financial critique and he pointed out that intelligence alone does not guarantee success. “I've seen all sorts of people with terrific IQs that end up flopping in Wall Street or business because they beat themselves,” he said.

Warren Buffett speaks during a fundraising event for U.S. Democratic presidential candidate Senator Hillary Clinton | Getty Images | Photo by Mario Tama
Warren Buffett speaks during a fundraising event for U.S. Democratic presidential candidate Senator Hillary Clinton | Getty Images | Photo by Mario Tama

The billionaire investor has taken multiple swipes at Trump over the years. In 2019, in an annual shareholder letter, he criticized Trump’s policies and said that no one person should claim credit for the U.S. economy’s good health.

Buffett had previously supported Hillary Clinton in the 2016 elections, and in the 2019 letter he wrote that “it is beyond arrogance for American businesses or individuals to boast that they have ‘done it alone’,” The Guardian reported.

Several of Trump’s ventures especially those in the casino and hotel industries have failed over the years. Projects in Atlantic City and New Jersey struggled financially for years eventually facing bankruptcy.



 

One of his most ambitious projects, the Trump Taj Mahal, filed for bankruptcy in 1991, following a pattern of overleveraging and financial mismanagement that Buffett pointed out in his lecture. Trump’s Plaza Hotel also filed for bankruptcy around the same time, indicating a similar trend.

On February 16, in a sweeping civil fraud verdict, a New York judge ordered Donald Trump to pay penalties worth a whopping $355 million, after finding out that the real estate tycoon had misrepresented his wealth for years.



 

Judge Arthur Engoron delivered the verdict after the trial in New York. Attorney General Letitia James’ lawsuit punishes Trump, his company and executives, and his two eldest sons, for scheming to dupe banks, insurance providers, and others by inflating the former president’s wealth on financial statements, according to AP.

The landmark verdict forces a shakeup at the top of the Trump Organization, putting the company under court supervision, and curtailing its business as of now.

MORE ON MARKET REALIST
The comedian was impressed by the simplicity of the product and amused by the pitch.
5 hours ago
Harrison usually makes smart deals on the show, but this vintage car buy turned into a costly mistake.
8 hours ago
Had she started the game in a better way, she might have won the five-figure prize money.
9 hours ago
Barbara Corcoran made the exact same offer, and she wasn't happy about being rejected.
1 day ago
The guest believed that it was worth a modest amount of money, but that was clearly not the case.
1 day ago
With James Holzhauer in the lead, Amy Schneider and Andrew He decided to joke around.
1 day ago
Barbara Corcoran told the founders that she had never seen Greiner so passionate.
1 day ago
The guest said that it was left to her by her grandmother who passed at the age of 102.
2 days ago
The host was quick to latch on to his way of speaking and made a mockery of it on TV.
2 days ago
The contestant was clearly just happy to win the chance of being on the same stage as Drew Carey.
2 days ago
The player, Thomas Russo, nearly put all of his strength into spinning the wheel.
2 days ago
Things took a turn for the better with the shark as far as the entrepreneurs were concerned.
3 days ago
The expert pointed out the intricate details on the item and said it was a personal item of the royals.
3 days ago
The expert said that if the signature was on a letterhead when Garfield was President, it would be worth more.
3 days ago
Had the contestants not gotten their gamble right, they would have lost everything they'd earned.
4 days ago
The revelation came thanks to a fan who asked the question during a "Jeopardy!" taping.
4 days ago
The entrepreneurs' decision came as a big shock to the sharks, and they did not hide it.
4 days ago
Tina double-guessed her third answer, "Does April have 31 days?" Harvey gave her the stink eye.
4 days ago
All the theatrics didn't work when sharks started scrutinizing profit margins.
4 days ago
"Can I stop at any time?" the player nervously inquired. "You can stop any time you want, yes," Carey assured.
4 days ago