Long or Short Capital

Robert Kiyosaki is a maroon.

I haven’t read Rich Dad Poor Dad but I assume it contains common sense probably hidden amongst boring platitudes and high levels of noise (Ed note: this assumption as to how much common sense is in the book is being challenged by feedback from readers). The writer, Robert Kiyosaki, has turned his book and himself into a brand for repackaging common sense and selling it to idiots in the form of books, speeches and classes at the Learning Annex. He probably has even found a way to work “consulting of dubious value” into his product offering as well. This type of commerce is fine. If you can sell products to The Idiot Demographic, then more power to you.

But he seems to have evolved from “common sense in layman’s terms” to “erroneous information in layman’s terms” with a side helping of “terrible terrible advice.” For the last year plus, Rich Dad Poor Dad has been espousing that, in the words of a reader:

the stockmarket/mutual funds were for suckers… [you should be] long real estate, and metals, etc…[all this] last year riiight at the top of the bubble, and that if you dont get rich its because your lazy, because anyone can buy a building, convert it into an apartment, and sell for triple the price. Buy high and sell low kids!

Now he has completely contradicted all that advice in this article Rich Today, Poor Tomorrow which outlines how his McMansion living, double vacation home buying 3-kid having friends went from millionaires to selling their BMWs (the horror!). The formerly non-lazy hustling investors who were protecting themselves against inflation (or was his fear, HYPER-inflation) by buying real estate with freedom loan financing are now fools. This alone is a testament to the value of his advice.

He then reinvents macroeconomics by stating that:

Yep folks, it’s that simple. If cash + credit go up, we get inflation. If cash + credit go down, we get deflation. If the credit bubble bursts, all these freedom loan speculator types will be “short squeezed” as he calls it (it’s not really a short squeeze, if you want to use a trading analogy, it’s more like a margin call) and have to pay lenders cash to keep their collateral position whole in the face of declining real estate prices.

This is idiotic. In fact, this article is so terrible, I find it difficult to even know how to properly form an argument against it. It doesn’t even make sense.

But here is more evidence to unback-up the truck on Rich Dad Poor Dad guy.

From his first ever Yahoo article:

“I’m very bearish on the U.S. dollar and have been for years. That’s why I have so many of them. This sounds like a contradiction, but let me explain. The reason I have so many dollars, even though I think they’re worth less and less, is because I don’t hang on to them. In my mind, cash is trash..

In the late 1990s, when people were pouring money into the tech and dot-com stocks, my dollars moved into oil, gold, silver, and real estate, when prices were low. Today, because the dollar continues to drop in value, I keep moving my money into those same asset classes, although much more cautiously.”

From a later article:

In my opinion, that means getting out of anything else that’s “paper with ink on it” — anything backed by the full faith and confidence of the SS U.S.A. That means I’m very suspicious of stocks, bonds, savings, and mutual funds, especially if they’re U.S. dependent. Although I love real estate, I’m suspicious of any piece of property that doesn’t generate cash flow today. I don’t invest in future appreciation of real estate — not today, at least.

While he is effectively mananaging his intelligence, and I applaud that, what exactly does this leave people to do with their money? He advocates against cash, stocks, bonds, saving money, buying things, the US, real estate, etc etc. What is left? Brine shrimp futures? Short or long positions in abstract ideas like Perf?

Recommendation: While we respect selling common sense to idiots, if you sell wrong sense to idiots, we have to short you if only to maintain a feeling of moral rectitude. Furthermore, we recommend a blanket shorting of anyone who speaks at the Learning Annex or anyone who has written a book with “Success”, “Rich” or “Positive” in the title. By the way, if you would like to learn more about our views, we will be hosting a free* workshop** “Don’t Believe Anything You Hear at the Learning Annex” at the Learning Annex this Saturday.

*Free after a payment of $899 for the 1st day or $1299 for two days
**Not actually a workshop or actually a real event

Addendum: Here is an in depth review of Rich Dad, Poor Dad and Kiyosaki, I haven’t read it but the criticisms match his columns as well and point to the fact that the book is less common sense than I assumed.