In August, real estate guru, Donald Trump, announced he purchased stock in several large companies. Trump explained, “I’m not a stock person. I love real estate, but good real estate is very hard to get.” In this Fed induced low interest rate environment, many investors are turning to stocks in hopes of higher returns.
Donald Trump’s reasoning for buying these stocks was fairly straightforward. Trump said, “I love these companies. I’ve watched them for years and I’ve never owned stock in them. I went out yesterday and said, look I’m not getting interest on CDs, so I went out and bought some stock.”
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Listed below are updates on the six stocks that Trump loved on August 10th:
Bank of America (NYSE:BAC) is the biggest loser on the list. Since August 10th, shares are down about 19%. On Tuesday, the WSJ reported that the bank could face action from regulators if the company falls short on efforts to strengthen its business. The bank has been trying to recapitalize, including a $5 billion deal with Warren Buffett (NYSE:BRKA) and a sale of a $10 billion stake in China Construction Bank. Bank of America even tried to charge customers a $5 monthly debit fee.
Citigroup, Inc. (NYSE:C) is another bank on The Donald’s stock list that has performed poorly. Shares are down nearly 12% from August. Recently, the bank announced it is considering as many as 3,000 job cuts. “As part of our ongoing efforts to control expenses, we are making targeted headcount reductions in certain businesses and functions across Citi,” Danielle Romero-Apsilos, a spokeswoman for Citigroup, said in an e-mailed statement.
Johnson & Johnson (NYSE:JNJ) and Procter & Gamble Co. (NYSE:PG) are two of the more stable stocks on the list. Both have returned about 5% in capital gains since August, while also maintaining a dividend north of 3%. Both companies are large producers of consumer products, with strong dividend reliability. P&G has increased its dividend every year for 54 years, while J&J has increased its dividend for the past 48 years.
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Caterpillar (NYSE:CAT) is a worldwide leader in heavy construction and mining equipment, and receives 60% of its revenue from international sales. Shares have increased 8% since August. Caterpillar shares Trump’s view that interest rates will remain low. In the company’s October earnings report, Caterpillar reveals that it does not believe Bernanke will stop at record low interest rates. The company states, “We expect additional actions to maintain liquidity growth.” Caterpillar also predicts that the Bank of Japan will continue to hold interest rates near zero, and Latin American economies will likely reduce interest rates. Caterpillar also correctly predicted the recent cut in interest rates by the ECB.
The best performer from Trump’s stock list is Intel (NASDAQ:INTC). Shares have gained 17% since August. Shares received a boost from a strong third quarter, as the company reported net income above expectations. Net income for the semiconductor company rose to $3.47 billion (65 cents per share), compared to $2.96 billion (52 cents per share) in the same quarter a year earlier. This marks a rise of 17.4% from the year earlier quarter. Revenue also increased 28.2% to $14.23 billion.