Presidential Portfolio Makeover: Ralph Nader

Nov. 3, 2000 -- Americans (those who vote, in any event) will soon head to the polls to choose a new president. The major candidates and their running mates are pledging to steer the nation through continued prosperity. To determine which candidate is best suited to run the nation’s fiscal engine, we examined how the candidates handle their own finances, and then huddled with professional financial planners to hear their thoughts. The planners had some advice for the candidates on how to improve their portfolios. And if it doesn’t help you decide who you’re voting for, it may help you with your investments.

Ralph Nader, that most principled of cheapskates, is probably the candidate financial planners would most like to marry. He is a saver. It’s not just that he has a cheap, old car; he doesn’t own a car at all (he rides the subway and takes buses). No big tailoring bills here: his suits betray that insouciant indifference to fashion coveted by D.C. wonks. Yes, ascetic-in-chief Nader may be the only candidate who could win votes from both the anti-WTO crowd and the Amish.

A Cash Concentration

Though he spends only about $25,000 a year, according to a spokesperson, Nader brings in a pretty decent income: including speaking fees, he earned close to $400,000 last year. Sidney Blum, a certified financial planner and CPA at Successful Financial Solutions in Deerfield, Ill., estimates Nader earned an additional $140,000 from investments last year, not counting capital gains.

But Blum thinks Nader’s portfolio — worth about $4.5 million — isn’t diversified enough. The candidate has about 57 percent in cash or near-cash, less than 5 percent in bonds, and only about 38 percent in equities. Of that 38 percent, 25 percent is concentrated in one stock: Cisco. “If you take away the cash, he’s sitting with a high percent in what we’d call aggressive growth,” says Blum. “I’d say that the portfolio’s really overweighted in one stock and in tech in particular.” Nader has an 87 percent concentration in technology, 2 1/2 times the benchmark 33 percent of the S&P.

Blum suggests Nader apply some of his considerable annual income towards investments in other sectors, like health care or financials. “If it were an individual client, I’d say sell [some] Cisco and diversify,” says Blum. “We’ d like to have Cisco in every portfolio that we have, but it’s just that too much of a good thing is dangerous.”

Other stock holdings include Ziff-Davis, Iomega, Cadence, 3Com, and ACTV. Nader appears to take an interest in rooting out emerging tech players; Blum said he had to troll the Web to track down information on an obscure over-the-counter holding, Fibercore, a fiber-optics company.

‘Fairly Risk-averse’

Of Nader’s equity holdings, about 80 percent is in large-cap companies, 11 percent in medium-cap, and 9 percent in small-cap. Eighty-three percent of his holdings are in growth stocks, with a mere 14 percent in value and 3 percent in blend.

Nader also has fairly modest stakes in mutual funds Fidelity Magellan and Fidelity OTC.

With a 60/40 ratio of cash and bonds to stocks, Blum says, Nader could be considered “fairly risk-averse.” “There are not that many [stock] holdings; most of it’s in cash and a couple of bonds. He’s placed high risk on some of the stocks, but he’s got cash there if everything went to hell in a handbasket — probably enough to live on.” That’s good, since Nader isn’t given much of a chance of winning the presidency. Blum notes, “Running for office will probably help his speaking fees go up.”