Perhaps you've heard this proverb about borrowers and bankers:
If you borrow $10,000 from the bank and you can't pay, you have a problem. If you borrow $10 million from the bank and you can't pay, the bank has a problem.
Add a bunch of zeroes to the numbers, and you had this proverb lived out in the finances of Mr. Donald Trump (search), who in the early 1990s had personal and business debt obligations ($900 million and $3.5 billion, respectively) that he could not meet. Whereupon, he let his bankers know that the time had come to "renegotiate."
Now, maybe some of you reading this can hardly abide even the thought of Mr. Trump, and I understand: He personified the vanity and excesses of a certain type of affluence in the 1980s and 1990s. For anyone blissfully ignorant of his exploits, one example should do: In 1987 he spent $29 million on a five-deck, 282-foot yacht.
Alas, says Trump, some people thought this was greedy. But he replied, "what those critics don't know is that the same assets that excite me in the chase often, once they are acquired, leave me bored." Indeed:
"After a couple of years I started to think about an even bigger boat, and I actually had plans drawn for one. This is a classic example of how I keep trying to top myself. Owning the world's most magnificent yacht only made me want to get something even bigger and better."
When the gods doomed Narcissus (search) to love only himself, the young man's reflection gazed back from the surface of a mere pond. Picturing Trump cruising aboard his yacht, one wonders if New York Harbor itself sufficed in size to let The Donald behold his countenance.
Donald Trump has a bull market personality. He builds, buys, and possesses the biggest, best and most beautiful. He also wants to have the largest possible audience as he does so, which may help explain why he had written (or spoke into the tape recorder of a guy who could write) three autobiographies by the ripe age of 53.
It's hard to imagine that in three books about himself, Trump would overlook even one of his notable accomplishments. Yet interesting lives can include especially interesting ironies: By chronicling himself and his opinions of the world over the past two decades, Trump likely managed his most noteworthy feat of all without even knowing it, to wit:
He follows a conspicuous pattern of thrusting himself into the limelight near important market peaks.
"Trump: The Art of the Deal" was his first book, published in November 1987. The Dow Industrials had been in a five-year rally and stood at a record high. The book appeared in print just days after the famous Black Monday crash of October.
"Trump: Surviving at the Top" was published in August 1990, within days of that year's stock market peak and another record high in the Dow. In the months following that peak the Dow declined more than 20 percent. "Trump: The Art of the Comeback" was published in August 1999, at the 10-year peak of an average that's closer to Trump's main business: the Real Estate Investment Trust Index (search). A 30 percent correction in the REIT Index followed. "The America We Deserve" was published in January 2000, the very month of the all-time high in the Dow. Next came the longest bear market since the Great Depression.
Now Trump is in the limelight once more, this time on display in the smash TV hit "The Apprentice." (search)
The show's producers knew precisely how to saturate the billionaire in his own vanity. Each episode concludes with Trump up on a God-like throne. Beside him are two assistants to form a trinity; before him three supplicants grovel. They beg not to be banished from The Donald's presence. Nevertheless, he chooses and pronounces: One poor soul is exiled.
But wait -- his success on television has inspired Trump to grace the world with a fourth autobiographical installment. This one will go by the title, "How to Get Rich: Lessons from 'The Apprentice' and Other Big Deals."
And where is the stock market these days?
It's been up, up and away, in the midst of the largest rally in four years. The Blue Chip indexes (search) have climbed 40 percent since early 2003, the Nasdaq some 70 percent. The New York Times reports that in January 2004, stock mutual funds had the largest monthly inflows "since early 2000, just before the bubble burst."
In turn, Donald Trump is preening before an audience in the tens of millions, with another book coming out to boot. A coincidence, or the perfect fulfillment of a pattern that speaks for itself?
I don't know if Trump -- and the stock market -- will repeat themselves. After all, past performance is no guarantee of future results, even in the life of The Donald. Still, it's wise to recognize when the market has probably gone too far too fast -- and how the lives of other people can deliver the same message, even when they don't know they're doing so.
Robert Folsom is a financial writer and editor for Elliott Wave International, a financial analysis company. He has covered politics, popular culture, economics and the financial markets for 16 years, and today writes EWI's popular Market Watch column. Robert earned his degree in political science from Columbia University in 1985.