Now, if this is not your first time hearing the name "Donald Trump," you probably are aware that he is a master of sleight of hand. Once, New York was famous for the three-card monte hustlers deceiving rubes in side streets near Times Square. Now, Trump is as good as we've got.
We reached out to a coterie of experts on personal wealth to explain the ways in which Trump's $9 billion might mean something very different than "Donald Trump is worth $9 billion."
Kieran Osborne is portfolio manager at Mission Wealth Management in California, and he pointed out the first asterisk that should be applied to that number. Forbes pegged Trump's net worth at $4.1 billion. (That's an estimate, which they explain here.) Since net worth is generally the difference between assets and liabilities, if Forbes and Trump's numbers are accurate, Trump holds somewhere near $5 billion in debt. ($9 billion in assets minus $5 billion in liabilities is $4 billion in net worth.)
Not that net worth tells the whole story. As Steve Stanganelli of Clearview Wealth Advisors explained, net worth itself can be deceiving. "It would be like your grandmother who has no money in the bank to pay her bills but owns a McMansion that has no mortgage on it," he said over e-mail. "On paper, her net worth is high. But the reality is that grandma still will have trouble paying for groceries since she can’t pay her bills with her net worth."
Her house is illiquid, as they say. And that holds for a lot of Trump's net worth, too, given that it's tied up in hotels, housing and office buildings. "A lot of the stuff is illiquid," Osborne said, so "the value is based on an estimate of what it would sell at on the market." When it comes to determining those assets, "obviously, there are going to be some differences."
That's the second asterisk. Donald Trump apparently owns 725 Fifth Ave. The value of that building (home to the Gucci store that Trump likes to brag is worth more than Mitt Romney) is somewhat subjective. "To get that evaluation, they'll look at comps" -- comparable buildings that have sold -- "look at the surrounding areas, at property that's traded in the last 12 to 18 months in the same vicinity, and also look at how prices have tracked -- if they've increased or decreased," Osborne explained.
That raises the question of who's doing the valuation. The Post reported that it was Trump's longtime advisers who were putting the figures together. If Trump's goal is to demonstrate his vast wealth, he has an incentive to have them err on the side of more value in his properties. Osborne notes that the numbers will be released publicly and, therefore, be subject to scrutiny, providing a disincentive to inflate too much. As Milad Taghehchian of Pioneer Wealth put it in an e-mail, "Any financial analyst or accountant will tell you it is easy to manipulate numbers. The roll of analysts is to dig through accounting to determine the real numbers."
Osborne put it another way. "The first thing that pops into mind," he said, "he's just throwing a number out."
First thing that popped into our minds, too.