World’s third richest man and American business magnate Warren Buffett had a life lesson for students in the year 1991, and Donald Trump came up as an example — and a bad one. During a question-and-answer round at the University of Notre Dame in 1991, Warren Buffett simply suggested students to not borrow money like Donald Trump, then a businessman, according to a transcript published by a former hedge fund manager.
“I’ve seen more people fail because of liquor and leverage – leverage being borrowed money. Donald Trump failed because of leverage. He simply got infatuated with how much money he could borrow, and he did not give enough thought to how much money he could pay back,” Warren Buffett had said.
“Where did Donald Trump go wrong? The big problem with Donald Trump was he never went right. He basically overpaid for properties, but he got people to lend him the money. He was terrific at borrowing money. If you look at his assets, and what he paid for them, and what he borrowed to get them, there was never any real equity there,” the Oracle of Omaha said.
He also said that most businesses and with most individuals, life tends to snap you at your weakest link, which may be alcohol, it may be gambling, it may be a lot of things, it may be nothing, which is terrific. “But it is a real weakest link problem,” he said.
What Warren Buffett concluded was that if somebody is smart, then he/she does not need to borrow money to run a successful business. “If you’re smart, you’re going to make a lot of money without borrowing. I’ve never borrowed a significant amount of money in my life. Never. Never will. I’ve got no interest in it.”
“The other reason is I never thought I would be way happier when I had 2X instead of X. You ought to have a good time all the time as you go along. If you say “I’m taking this job – I don’t really like this job but in three years it will lead to this,” forget it. Find one you like right now,” he told Notre Dame students.