I don’t know whether it was theft or stupidity, but it was a shame.
Herschel Walker is an athlete who signed big contracts, with both the USFL and NFL. One day, he came to me and told me he was going to invest in a fast-food franchise. I told him, Herschel, you are a friend of mine, but if you do that, I will not speak to you again. Because of the relationship we had (and continue to have), he decided not to make the investment. The company went bankrupt two years later. Herschel is now a wealthy man, and he thanks me every time I see him.
When it comes to picking a financial adviser, rely on your own judgment based on what you read in reliable publications like
The
If you read these financial publications for a while, you will start to pick up on the cadence and get a feel for what’s happening in the market, which funds are the best, and who the best advisers are.
Stay with the winners. Often, you will read about somebody who has made money quickly and then relies on one of his friends to invest his fortune. That friend has no track record, and if it weren’t for his connection to a rich investor, he wouldn’t have any money. Beware of instant stars in the world of finance. Trust the people who do it again and again, and who are consistently ranked high by the four best institutional business media outlets. But trust your own common sense first.
Invest Simply
There are numerous firms that provide comprehensive charts and other information on the best returns from certain financial advisers and funds. Study those charts, not over the short term (maybe they just got lucky) but over a fifteen- or twenty-year period.
Invest with the help of a major firm like Goldman Sachs, Morgan Stanley, Bear Stearns, or Merrill Lynch. These are your hard-earned savings at stake. Don’t take unnecessary risks.
Generally there is a reason for success. When you look at legends like Alan Ace Greenberg and Warren Buffett and marvel at how good they are, you will likely see that what makes them so successful is the same quality you should apply to every one of your own investments—common sense.
I’ve read many of Warren Buffett’s annual reports. In every case, what fascinates me is that he is able to reduce things to the simplest of terms.
Many accomplished Wall Street gurus can make you dizzy with talk of intricate financial maneuverings. They might impress you with their sophisticated computerized trading results, their fifty percent returns from options on products that may not even exist yet. Fortunes are won and lost every day in these markets, but as far as I’m concerned, those folks would be just as successful if they ditched their hedge funds and put all their money on their favorite roulette number at the Trump Taj Mahal Casino in Atlantic City.
You paid good money for this book, and I know you’re expecting sophisticated investment advice. The wisest thing I can tell you is to invest only in products you understand, with people you know you can trust. Sometimes the best investments are the ones you don’t make.
Get a Prenuptial Agreement
I’ve said it before—I even wrote a chapter on the art of the prenup in one of my other books—but I’ll say it again for anyone about to propose: A prenuptial agreement doesn’t mean that you won’t always love your spouse. It doesn’t mean that you have doubts about the person’s integrity or questions about the relationship. All it means is that you recognize that life, especially the parts involving love and business, can be complicated. People have a right to protect their assets. If you own your own business and you’re facing a difficult divorce without having secured a prenuptial agreement, your negligence could jeopardize the livelihoods of your employees. I know plenty of women who are supporting their husbands, and this advice applies equally to both sexes.
If I hadn’t signed a prenup, I would be writing this book from the perspective of somebody who lost big. We needed a bus to get Ivana’s lawyers to court. It was a disaster, but I had a solid prenup, and it held up.
A friend of mine is married to a woman who stands only five-foot-two, but he’s petrified of what she will do to him in court, all because he didn’t get a prenup. Before he met this woman, he’d had four unsuccessful marriages, yet he told me, Donald, I’m so in love with this woman that I don’t need a prenuptial agreement. I didn’t have the courage to tell him what I was thinking to myself: Loser!
A year later, the marriage was over and he was going through hell. When I saw him, he looked like a frightened puppy.
There’s nothing wrong with common sense. Be like Thoreau and simplify.
Cut Out the Middleman
Wayne Newton is a great friend of mine, and he made a lot of money over the years. Unfortunately, given terrible advice, he lost his money and was forced to declare bankruptcy. Meanwhile, his lawyers were eating him alive.
He called me and said, Donald, I heard you owed $9.2 billion to a hundred banks in the early nineties and you never went bankrupt. How did you do it? Because I just can’t seem to get out of this mess. My lawyers are making a fortune and the banks are impossible.
I asked Wayne how many banks were involved. He told me it was three. You’re lucky, I said. I had ninety- nine banks and I made a point of becoming best friends with everybody at every bank. You have to do the same.
I gave him some more advice, which he has generously acknowledged in many interviews. I told him, Wayne, you are a major celebrity. Have your secretary call the three banks and get the person who is really in charge, not the figurehead, and personally talk to all three people. Arrange a meeting with them, ideally a dinner with them and their families. Get to know them. At the end of this period of time, they’ll like you. They’ll be impressed by you because you are a celebrity. They may control a lot of money, but they don’t control fame, and people are impressed by fame. Forget your lawyers. They are never going to want to settle the case, because then their legal fees stop. You must do it yourself. Call the bankers. Become friendly with the bankers. And make a deal.
Wayne called me three weeks later. He’d had dinner with all three bankers and said they were among the nicest people he’d ever met. They brought their wives and children. Later, he cut deals with every one of them. The banks were taken care of over a period of time, the lawyers didn’t get any richer, and today Wayne is doing fantastically well.
You’re probably wondering how this rule applies to your life if you are not headlining a major Las Vegas show. Here’s how: Wayne took control of the situation. He appealed to the people in charge. Most of us need lawyers at some point in our lives, and we all have to deal with large bureaucracies. But sometimes you need to go right to the top, and you need to do it yourself. You don’t have to sing Danke Schoen to make a sincere personal approach.
