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No. of Recommendations: 8
Donald's daughter pulls his shorts out of the Fool fire?

No, not at all. What happened was that Donald invited out David Gardner and Jeff Fischer (although Dale and an intern also came along) http://www.fool.com/portfolios/rulebreaker/1999/rulebreaker990908.htm wined 'em and dined 'em, and said, in essence "yeah, we realize just how bad all that debt is, we're working to remove it all, because we agree with you guys, the debt is just awful. Thanks for helping to point this out to us". Trump claimed that his daughter brought the Fool's to his attention, but everything else was pure Donald, including

"I give you my word," he said, looking us straight in the eye. "We are totally focused on reducing the debt, paying off the debt, and increasing cash flow."

And so, they believed him, and they covered their short.

God, how STUPID! First of all, they should have covered the short AGES earlier. They'd originally shorted the stock at about 9 bucks a share, only to watch as it jumped over 12 within a month and a half. Then, after another 4 months, it finally fell below ten, only to flirt with double digits until march of '98, almost a full year after they shorted the stock.

Then, at long last, came success! By the end of August the stock was trading at barely over 3 bucks a share. OK, remember from the Motley Fool Investment Guide, shorting is a short term investment. Heck, here they'd already held the darn thing for 18 months, and FINALLY pulled a great return.

So what do they do? They proceed to sit on it EVEN LONGER! It goes up to 5, back down to 3. Do they cover. No, they keep holding it, for ANOTHER YEAR, before finally covering in September of '99, at a cost of just under 5 bucks a share. They totally disregarded their own advice in the Guide, not for the first time or last time.

And even worse, they acted like they'd helped Donald "see the light". I mean, c'mon guys, Trump got wealthy as a real estate developer. Ya think he didn't know how to read a balance sheet, what debt was? Problem is, Donald was probably used to leveraging himself to the hilt and using that to make money. With his ego, ya gotta figure that he thought 12% interest was nothing he couldn't overcome.

Anyway, TMF believed him and so they covered. At considerably less profit than they could have received many times in the prior year. But what the hey, one could make worse mistakes, right?

-synchronicity
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