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Today I read an interview MarketWatch did with Robert Kiyosaki: “‘Rich Dad’ author Robert Kiyosaki: If you’re investing for the long term, ‘you’re crazy’”

Source: http://www.marketwatch.com/story/rich-dad-author-robert-kiyosaki-if-youre-investing-for-the-long-term-youre-crazy-2016-08-25

I’ve never read Robert Kiyosaki’s Rich Dad Poor Dad but I have read Unfair Advantage. From what I understand from speaking with folks who have read Rich Dad Poor Dad the principles in Unfair Advantage are very similar.

Robert Kiyosaki

Robert Kiyosaki

I learned from reading his book. I didn’t learn a lot about specifics actions I could take but I did learn about mindset and principles of the wealthy.

For specifics he pushes his paid training classes and seminars pretty hard. I went to one of his “free” real estate seminars and it is sales heavy and content light.

I’ve never been to a paid Rich Dad seminar but I hope they have a lot more actionable content than the free one I attended.

Based on my exposure to the teachings of Robert Kiyosaki I will say that I agree with what he is saying. I just think he overcharges for training and actionable information.

Summary of Kiyosaki’s Interview

In the MarketWatch article above he says a few things:

  • Money isn’t money because it isn’t backed by gold
  • The rich don’t work for money they work for assets
  • He is predicting a 2016 market collapse
  • Describes himself as a “gold bug” and views gold not as an investment but an insurance policy and hedge
  • He states who he’ll vote for with the caveat the president doesn’t make any difference at this time

You know what, I agree with all of that, with the exception of calling 2016 as the year of the crash. It could be but I don’t know when stocks will crash and when they do I believe the Fed will step in and prop up prices.

Comment Pillory

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But what I’m surprised by is the comments below the article. They weren’t all negative, but it seemed like most of the ones I read were.

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Not a lot of substance besides name calling. I think the comments could provide some insights into how some retail investors think. They don’t want anyone raining on the stock rally parade.

These quotes are from people who, in my opinion, don’t understand the stock market or the economy.

Why I think Kiyosaki is Right

The Federal Reserve’s unprecedented action in propping up assets has created a huge bubble. The bubble is bigger than the dot com bubble in 2000 and the housing crisis of 2008.

Even if you think that the $4 trillion fed balance sheet is no big deal, there are other metrics that indicate the S&P 500 is overvalued. On average the P/E ratio of the S&P 500 has been around 15. It’s currently up to 25. Not exactly a bargain.

Source: http://www.multpl.com/

Gold is a hedge against Federal Reserve and central bank insanity. I don’t think gold should be the sole asset in one’s portfolio but could very well have an important place depending on your risk tolerance and other factors impacting suitability.

Gold has outperformed each of the 3 main US indices by over 300% since 2000

Gold (dark red) has outperformed each of the 3 main US indices by nearly 300% since 2000

I also know several people personally who have done very well investing in real estate. I think real estate is a great way to grow wealth with lot’s of tax benefits.

In the article Kiyosaki also discusses one practical strategy for buying a stock, first buying an option, as well as the importance of buying stocks at a great discount. Buying companies for less than their book value is classic Benjamin Graham.

I can appreciate if people don’t like Kiyosaki’s sales tactics as I don’t particularly care for them either. But I would like it if people could discuss ideas without immediately resorting to name calling.

If you think stocks are fairly valued based on fundamental factors, why?