Monday, May 20, 2019

The Calculation That Says President Trump is Worth $16.82 Billion

President Donald Trump reported income of at least $434 million in 2018, according to his annual financial disclosure released last Thursday by the White House.

That, of course, is a serious piece of income but it is his income not his net worth, since net worth is based on a stream of income. If we assume the president will continue to earn this stream of income annually, we can roughly estimate what he is worth.

You see, stocks trade on a rough approximation of a multiple of their annual earnings/income. Currently, the price-to-earnings ratio of stocks in the Dow Jones Industrial Average is 17.71.

The price-to-earnings ratio of stocks in the S&P 500 is 22.07.

So using these as rough measures, if President Trump were a stock, that is a publicly trading company, his market capitalization, or net worth, would be between $7.686 billion and $9.578 billion.

If you wanted to go the best case scenario, assume some growth in his earnings and use the current PE ratio of the Russell 2000 Index, which is currently 38.75, the President's net worth would be roughly $16.82 billion.


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