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Here we go again. I stopped commenting on the ridiculous and dangerous lessons from Robert Kiyosaki because I felt it just wasn't worth it. I'll ask again why Yahoo! Finance gives him a forum at all. Anybody can see how stupid his statements are. But I'm afraid that if you don't dig a little, his advice can actually seem reasonable and that's what makes it scary. Once you look a bit more closely you will realize that he simply doesn't make any sense.
His latest article is about fear holding you back from making money. Mr. Kiyosaki begins his article by saying that Wall Street has paid out huge bonuses this year which is true but he goes on to say "Those bonuses came from investors who believe investing is risky." What? If they thought investing was risky wouldn't they have put their money in the bank or under a mattress? Why does he say this? What does he mean?
Using an article from Time magazine that doesn't deal with or even mention investing at all, Mr. Kiyosaki points out that we humans do some pretty irrational things because of fear. The example he gives is that someone who is afraid to fly would rather drive even though more people are killed in auto accidents than in plane crashes by a wide margin. Fair enough but when he tries to make a bridge to investing his argument falls apart.
Robert says "But the fact is that savers are the biggest losers of all." You have to know that he means people who put money in the bank and buy mutual funds are losers and people who are investors are winners. He indicates that investors are people who buy commodities like gold and oil or people who invest in real estate. "In 1996, gold was approximately $275 an ounce; by 2006 it was over $600 an ounce. In 1996, oil was approximately $10 a barrel; in 2006 it was over $60 dollars a barrel. Compare the price of real estate in your area between the same 10 years and you'll notice that the purchasing power of your dollar has slipped."
Yeah that's true but someone who invested in Mutual fund X ten years ago probably made money too. Maybe not as much as gold but that has more to do with what time period Mr. Kiyosaki chose. For example in the 10 years between 1987 and 1997 if you invested in gold you lost a lot of money because the price went from 486.50 an ounce to 287.05.
It's no secret that Mr. Kiyosaki is no fan of mutual funds but to prove his point he quotes John Bogle the biggest proponent of index mutual funds, the most passive of investments that there is. "John C. Bogle, founder of the Vanguard Funds, states in his book The Battle for the Soul of Capitalism, 'When we have strong managers, weak directors, and passive owners, it's only a matter of time until the looting begins.' Bogle has spoken out this way because the mutual funds industry is legally looting money from investors."
Again there is a bit of truth here but Kiyosaki uses that to confuse things. Yes John Bogle is concerned about the fees that mutual fund companies and managers charge but that doesn't mean that mutual funds are a bad or risky choice. Quite the opposite, Mr. Bogle would argue that mutual funds are the best investment choice as long as you go with index funds, the very funds he invented.
This isn't the first time Robert Kiyosaki quotes very respected investors to support premises that the very people he quotes would disagree with. He's quoted Warren Buffet and I can't think of two more diametrically opposed investing philosophies.
In his most ludicrous connection Robert uses the Time article to show that experts can't be trusted because a group of communications and finance experts were wrong about the risk posed by avian flu. Robert writes "The point is that you need to be critical of experts. Is the person you seek advice from able to give you a credible answer?" Well yes if you asked them about communications or finance I bet they would have gotten the answer right.
As if things weren't ridiculous enough he names three "experts" that are "not qualified to give you sound investment advice." Number one on the list is "Non-investors." Huh? Who would consider "non-investors" investment experts?
Next Robert says you shouldn't trust "perceived experts" "Most people take financial advice from salespeople, not rich people. Most stockbrokers are not rich nor do they invest in what they sell. The numbers are even worse for real estate brokers." Again there is some truth here but someone does not have to be as rich as he is to be knowledgable about investments. By that logic does he suggest that the latest winner of the Powerball lottery is a great source of investment advice because he's rich? Also most stockbrokers are indeed rich by most measures.
Robert finally ends by saying investors themselves can't be trusted. His justification for this is the fact that a friend of his who is an investor hasn't taken any of his (Robert's) advice. Well neither do I and I can just guess what Robert would say about me.
So according to Robert you can't trust non-investors, you can't trust stockbrokers and other perceived experts, and you can't trust successful investors who don't believe everything Robert Kiyosaki says. So who does that leave? Well it must be the smartest, richest, and best investor ever born - Robert Kiyosaki himself.
Robert's right about one thing, fear can hold you back. But fear can also help you avoid dangerous situations or dangerous people. I say fear Robert Kiyosaki and use common sense when evaluating investment strategies.
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