If you bought DJT stock after Trump clinched the nomination, you were already too late

By Brett Arends

Losses over the past several months show DJT was a trade - not an investment

The collapsing stock price of Donald Trump's latest stock market venture, Trump Media & Technology Group Corp. (DJT), proves once again an old Wall Street adage: "Buy on the rumor, sell on the news."

If you bought this stock before Donald Trump won the Iowa presidential caucus back in January, you are still in the black (although if you hung on most of your profits have evaporated).

But if you jumped on the bandwagon after that - even as early as Jan. 23, when Trump won the New Hampshire primary - you are pretty much out of luck.

The stock has halved in price since the day after New Hampshire. It's dropped by and fallen by two-thirds since the peak of the trading frenzy in late March, when the company - initially a shell company called Digital World Acquisition Company - formally completed the merger with Trump Media & Technology Group, parent of Donald Trump's "Truth Social" media platform.

Actually, even if you bought early - say, on the day after the Iowa caucus - and held on, you've actually made less money on this stock than you would have done just by owning the Vanguard Total Stock Market index fund VTI, which entails a lot less risk.

It's also a reminder of another Wall Street adage: Never confuse a trade with an investment. This stock was only a trade.

In retrospect, the "buy on the rumor" strategy was a gimme, and I can't be the only one kicking myself for not spotting it. We knew at the start of the year that DWAC was in line to strike a deal to take over Trump Media & Technology Group.

The smart move was to buy this stock the day after the Iowa caucus, when it was clear Trump would become the Republican nominee, and then sell when the merger deal took place on March 27.

Trading profits: About 200%, in 21/2 months. (The stock was $22 after Iowa, and closed at $66 on March 27).

Sadly, this is probably the opposite of what many ordinary people did. They bought the stock in late March at an elevated price, and are now sitting on...well, a big, fat tax loss you can carry forward on your tax returns for future years.

Hey, Trump promised to cut your taxes, right? He's succeeded. Thanks to the money you've lost on DJT stock, if you sell the stock you can book a loss that you can claim on your tax return. That can be used to shelter other capital gains from tax. Any unused losses can be carried forward to future years, and you can use them to shelter $3,000 of ordinary income from federal taxes per year.

Don't say Trump doesn't give you anything. The guy just cut your taxes and he's not even in power!

Trump himself owns 114.75 million shares, which cost him effectively nothing. That includes a 36 million stock bonus. At current stock prices, his stake is still valued at a hefty $2.6 billion. It's less than it was a few months ago, but as a pile of free money that's pretty sweet.

I asked Trump's campaign for comment. They referred me to the company. I asked the company, but didn't immediately hear back.

Trump is free to start selling shares, if he wants to, as early as next month when the post-IPO lockup expires. Meanwhile, now that he's back on X and cozying up to Chief Executive Elon Musk, some may wonder how much the "Truth Social" media platform is really worth anyway. Is it worth the Trump Media & Technology Group's $4 billion price tag? Is it actually worth anything at all?

-Brett Arends

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08-23-24 1416ET

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