Kiyosaki’s Stock Market Message Has a Greater Impact on You Than His Book
Before you take his advice, you must understand who he is.
Happy Sunday, wherever you are in the world. I didn’t hold back on the piece below. I’m never a fan of digging up skeletons, but there were just too many to ignore in RK’s story. If you enjoy reading this, please share it with a friend or family member. It helps me grow.
Robert Kiyosaki is a classic example of ‘those who can not do, teach’.
He paints a picture of the rich and the poor, almost as if they were two different breeds of humans.
I’ve watched and read his content for several years. He’s a prickly character who brazenly uses debt to avoid taxes and teaches this method to the world.
RK has a string of business liquidations, leaving suppliers out of pocket for millions of dollars.
Rich Global LLC became Kiyosaki’s third company out of four to go bankrupt after being ordered to pay $24 million to Learning Annex for not sharing profits from speaking engagements as agreed.
Bill Zanker, Founder of LA, was never paid in full and was quoted after the trial.
“I took Kiyosaki’s brand and made it bigger. The deal was I would get a percentage, and he reneged. We had a signed letter of intent. The Learning Annex was his greatest promoter. We put his ‘Rich Dad’ brand on a stage. We truly prepared him for great fame and riches. But when it was time for him to pay up, he said ‘no. And then he declared corporate bankruptcy.”
Kiyosaki is famous for his world-renowned book Rich Dad, Poor Dad, the first business book I read as a teenager.
One famous quote reads: “The lack of money is the root of all evil.”
It sold 32 million copies, and its central idea is pretty simple — it shows how so-called ‘poor people’ tend to buy things that cost them money (liabilities) while rich people invest in things that make them money (assets).
It’s hard to dispute that.
Fresh out of college, I joined a network marketing company in the U.K., and the people in the “pyramid scheme,” which is what it was, used to throw Kiyosaki’s name around like a dopamine-fueled buzzword — “Oh, have you bought his educational tapes? I’ve got tickets to his conference.”
Looking back, it was a smelly cash grab.
The only people making money were at the entrance, selling books and tapes that offered hope to folks trying to better their lives.
U.K. authorities where I live cottoned on and halted all Amway business operations in the country, claiming the company, short for “American Way”, had exaggerated their income and profited more from selling education material to distributors (me) than from legitimate direct selling of products.
Amway was the company Kiyosaki teamed up with to launch his book.
With over $100 million net worth, RK says, “The biggest problem in America and the world today is that the American Boomer generation is about to go bust.”
Kiyosaki’s message to those invested in the stock market is that the rug is about to be pulled out from underneath you.
Buckle up, and let’s dive in.
You can’t trust him, but he might be right.
The Baby Boomers were the largest generation ever known, coming from the world’s wealthiest countries.
They drove all the macroeconomic forces that we recognise as normal.
Macroeconomic wizard Raoul Pal says:
“When Boomers first came into the labour force in the 1970s when they were 20 or so years old, they bid up the demand for goods. Because if you think about it, a record number of people came in to buy their first suits, their first house, their first car, their first table, their first chair. Everything was new. That demand created an enormous global problem, creating the current inflationary environment”.
Pal says that Wall Street fed Boomers a simple story: “You don’t need to save as much money as your parents. You don’t need to save 20% of your income. What you need to do is give it to us. We’re the smart guys, and we’ll turn it into more money.”
Many financial pros balanced portfolios with 60% stocks and 40% bonds for years. According to Fed data, Baby Boomers hold 56% of the stock market’s value, around $78 trillion.
Kiyosaki openly hates the stock market because governments manipulate it with money printing. Now, there’s a concentration of capital invested — if it collapses, people will lose their pensions.
Robert Kiyosaki — Source
“When financial planners stepped in and started selling Boomer’s paper, you know they called it the 60/40, 60% stocks, 40% bonds. What a stupid formula that is. It worked up to now — it won’t work in the future.”
The business education mogul says you only need to look at how baby boomers have invested their money.
The generation born after the Second World War between the mid-1940s and mid-1960s all invested chiefly in the stock market. As they approach retirement age, a significant portion of their invested capital is expected to be withdrawn from the market.
“When the American Boomers go bust, it’s like China coming down because the Boomers have been feeding into the stock market. Most of them only have S&P 500 exposure. And when the S&P crashes, American Boomers will go with it, bringing the whole market down.”
Millennials will pay the bill for the shortfall in pensions and people living longer.
Robert Kiyosaki — Source
“We have 75 million American Baby Boomers about to go broke because 90% of them are in the stock market, the S&P 500. They watch what the FED does. I don’t give a sh*t what the FED does. When the stock market and the S&P crashes, you’re going to have homeless Boomers everywhere.”
Not everyone agrees.
It’s too big to fail.
Raoul Pal, a man with over 30 years of experience as a former Goldman Sachs bond trader, says Technology stocks will outperform, “But everybody is wrong about this market — I don’t see how you can have 2008 again once you have the money printer.”
He says everything is driven by liquidity, and “once liquidity changes, everything changes”.
Money printing will be necessary to service the debt because America is already at 122% of GDP, meaning the U.S. borrows more than it creates in productivity.
When the money printer cranks up, it supercharges asset prices into overdrive.
Interest rates will likely be significantly lower than 5.5% because the U.S. economy grows only 2.3% annually, and there’s $34 trillion in debt to service.
Ray Dalio, the world’s best fund manager, pointed out, “Central banks will be forced to print more money and buy more debt as they experience losses and deteriorating balance sheets.”
It’ll erode purchasing power but turbocharge assets with steroid-like potency.
The chart below shows the S&P500 mirroring the manufacturing index (ISM), the lead indicator for corporate profit.
The stock market has rallied because the ISM has bottomed. The market has priced in and anticipated future liquidity.
Final Thoughts.
Robert Kiyosaki has a knack for simplifying complex financial topics, which is why his book resonated with millions.
While it’s hard to see that he achieved any business success before his world-renowned book on making money — he makes an excellent point about the stock market.
Everything indicates that it’s going to crash.
Others think, “It can’t fail”.
I don’t see why the governments would let the Stock Market capitulate, taking close to 60% of the population’s pension funds with it, when you have the constant band-aid of printing money.
It’s as Raoul Pal says: “People are anticipating economic collapse. Instead, they got financial repression and debasement of fiat currency, optically driving up asset prices.”
So, instead, we may see the Stock Market continue to climb.
But a slow decline in the value of our money.