The former president has now become the majority stakeholder in a controversial website valued in the billions. However, the actual story behind this achievement is far from impressive, contrary to popular belief. Many perceive the stock market as rigged in favor of big investors, financial giants, and those privy to insider information. For individual investors, the chances of success on Wall Street seem as slim as winning big at the Bellagio.
Donald Trump's recent windfall doesn't help dispel this perception. By merging his struggling Truth Social platform, which has reportedly been hemorrhaging millions, with a shell company already valued in the billions, Trump orchestrated a remarkable feat. This shell company, known as a Spac, allows private businesses to go public without the rigor of an initial public offering, thus evading significant regulatory scrutiny.
But how did a mere shell company, devoid of tangible products or services, attain such lofty valuation? The answer lies in Trump's supporters artificially inflating the company's share price through online forums and social media, akin to the frenzy surrounding meme stocks like GameStop and AMC Entertainment.
When Trump exchanged Truth Social's shares for those of the shell company, their value had to be determined. Unsurprisingly, the Spac's inflated market price served as the benchmark. Consequently, Trump finds himself as the principal owner of a multibillion-dollar company, albeit one hosting a less-than-popular social media platform.
While this maneuver isn't illegal per se—buying and selling shares is legitimate—it does come with risks. Much like other meme stocks, Trump's company is susceptible to wild price fluctuations and potential collapses, leaving investors vulnerable. Yet, Trump and his wealthy allies are likely to have secured their gains by then, leaving individual investors to bear the brunt of any fallout.
It's a somewhat remarkable yet unsightly spectacle, emblematic of the dealings one might expect from a New York real estate mogul navigating the labyrinthine world of Wall Street finance. One can almost envision them clinking glasses at their exclusive country clubs, reveling in their ability to conjure billions out of thin air, all in service of mutual back-scratching that may pay off handsomely come election time.
Of course, it's all a facade. Trump's actions are nothing groundbreaking; the wealthy elite will always find ways to enrich themselves at the expense of others, while the rest of us content ourselves with modest returns on our investments.
For individual investors like myself, the lesson is clear: we stand little chance against the system or those entrenched within it. While there may be occasional success stories, the safer bet lies in entrusting our funds to seasoned fund managers who navigate these treacherous waters daily. They're the ones in the know, networking over lunch and indulging in leisurely games of squash at exclusive clubs while we watch from the sidelines.
Adopting this approach doesn't guarantee success, but it certainly provides more protection than attempting to navigate the market solo. That, ultimately, is the bitter truth of the matter.