Property Grunt

Tuesday, July 26, 2005

Cult of Kiyosaki

It seems that Robert Kiyosaki has finally jumped on the bubble bandwagon. On his rich dad website he speaks of the greatest bubble in history which was further confirmed by an article in the Economist that he actually read himself. Wow. He reads the Economist. That must mean he is a freaking genius.

Kiyosaki also enlightened his fast trackers with his brilliant concepts including his Greater fool theory

In the world of investing, there is what is known as The Greater Fool Strategy of Investing. When someone buys a property to flip, or a share of stock to sell at a higher price, that is the Greater Fool Strategy in Action. In simpler terms, a person buys a property or a share of stock not to own but in the hopes that there is a fool greater than them. The problem is, when the bust comes, and it will come, many people who were buying for a fool greater than them, may find out that they were the last fool in line.

This is absolutely eye opening. My god. I mean what other ingenious nuggets will he crap out next? Will his next big idea be a circular device that attaches itself to cars allowing them to move? Or maybe his next big idea will be combining peanut butter with chocolate?

Kiyosaki you dumbass, that fool strategy that you have discovered is called Irrational Exuberance, which was a subject of the book by Robert Schiller. But of course this is Kiyosaki’s interpretation of Irrational Exuberance, which is a lot better. Just like Pat Boone’s black leather interpretation of rock and roll cover songs was better than the originals. NOT!

The funny thing is that Kiyosaki is teaching a fool’s curriculum. Anyone who has just taken their real-estate license examination will tell you that this guy is presenting the bare minimum about real estate mixed with a little new age chicken blood for dramatic effect.

Apparently it has been working because he landed himself on one of the most prestigious financial shows on cable tv.

On Friday, June 23rd 2005, I was on Your World with Neil Cavuto on the Fox Network. He asked me what I recommended when it came to investing in real estate. I replied, “If you’re new to real estate investing, this is not the time to get into the game.” Unfortunately, many people are in the market late and not only have paid too much for their homes, they are over-leveraged.

Yeah. Thanks to you, you idiot. You’re one who pushed the real estate investing onto the masses like a sick parent pushing their underage son into Neverland Ranch. I am not blaming Kiyosaki for the bubble. That would be giving him too much credit. However he has benefited from the irrational exuberance of others and has not made the effort to stem the tide of ignorant investors drunk on his roofie elixir of wealth he has created.

I cannot believe that Neil Cavuto was actually fooled into getting this f**tard on his show. He has to tell his bookers to stop being so gullible. Even Fox News has standards.

The Economist article went on to say, “42% of all first time buyers and 25% of all buyers made no down-payment on their home purchase last year.” That is what I call over-leveraged. They bought late in the cycle, probably paid too much, and have signed their lives away on the dotted line. I am concerned for these people.

Yeah you’re concerned. You’re concerned that these people are going to come to your house, kick your monkey ass and demand their money back for the education, and I use the word education lightly, that you sold them. You should have been concerned for them when you first starting proselytizing real estate investing and discussed the dangers of real estate investing instead of downplaying the risk and throwing around words like cash flow and rat race.

Hey, Kiyosaki you’re a day late and a dollar short with your bubble talk. The real estate communities, including bloggers like myself, have been taking about the bubble for a while. You just started this month.

Besides the obvious reason of not wanting to look like more of a moron, why has the exalted one changed his tune so radically since the cornerstone of the rich dad philosophy has always been real estate?

The only answer I could figure out was that he was taking a break from counting the money collected from his over priced rich dad merchandise when one of his ass monkeys brought him the news that a bubble was looming. Kiyosaki probably realized that he was going to look like a real schmuck when the correction occurred and he was still doing his Bring it On act for real estate investing. He probably consulted his lawyers on the matter who told him that legally he had nothing to worry about but it wouldn’t hurt to warn his fast trackers about the impending bubble even though it was too late for any of them to do anything about it.

So he begins to write or has one of his ass monkeys write about the dire economic apocalypse that he alone has predicted therefore creating a smokescreen that he knew about this all along and is alerting the fast trackers of the situation.

This preemptive strike of talking about the bubble is simply Kiyosaki doing the CYA dance so when his followers get clobbered in the market, he will be doing the jig on the catbird seat saying “I told you so. Don’t blame me”

All you need to do is google rich dad poor dad and you will see that there is a multitude of suckers who have dedicated their lives to his philosophy. Every time these fast trackers read his words they cream in their jeans and have themselves a cash flow game circle jerk. I don’t know what’s worse, the cult of fast trackers or people who have dedicated their lives learning the Klingon language. At least learning Klingon is useful at Star Trek conventions.

Those poor bastards who followed his advice have binged on cheap properties like Orson Welles at an all you can eat buffet and are located in areas that are not exactly the hot bed of the real estate bubble which include Buffalo and Philadelphia. When it bursts fast tracker faith will be sorely shaken and many of them will get a first hand experience at foreclosures.

NYC Cashflow, devotees of the rich dad philosophy, have also begun a slow but obvious shift into other arenas besides real estate and are now focusing on other forms entrepreneurship as stated on their website. They obviously see the writing on the wall of what is happening with the New York market and do not want to be caught in any backlash. Yet despite Kiyosaki’s dire prediction, NYC Cashflow has at this time only addressed the issue of the bubble once. The way things are going I predict in the near future that NYC Cashflow is going to veer away from real estate and focus on something more contemporary and safe like high stakes poker in order to retain their members.

If you think I despise Kiyosaki himself. I don’t. I think he is bloody brilliant. He has made a fortune with his clichés and merchandising. All risk free on his part since he has never proposed his fast trackers to put their money in his personal investments. In fact there is evidence that he has a strict policy that none of his fast trackers are allowed to know of his financial portfolio and does not discuss his personal investments to the public for fear of litigation.

What I am concerned about is that under the guise of helping others he has preyed on our insecurities during these uncertain times. The words downsizing and outsourcing have become part of the vernacular of the general population. We are constantly on the edge wondering if our jobs will be on the chopping block and sent to another country. We seek a solution, something that will take away our fears of our uncertainty. Kiyosaki claims to have found the Holy Grail and we blindly embrace his words as the gospel convinced that he has the answers. When in fact we are being sold false hopes and dreams.

If you think this is sour grapes, please go to these two links Tiger Cafe and John T Reed's analysis of Robert Kiyosaki's work. I assure you all it will explain everything.

When I first started in the real estate business I realized that Kiyosaki was either wrong or very vague on a lot of aspects about the real estate business and began to do some digging about him. What I found out was surprising at first but then it made a lot of sense. Reading these sites will allow you to understand why I am so critical of Kiyosaki. Some reasons will be more obvious than others.

It is quite likely that Kiyosaki will be untouched by the correction and the resulting fallout. So what is the point of the Grunt’s words? All the Grunt wants is to call Kiyosaki out and show the world the emperor has no clothes. If it prevents even one person from buying into the cult of Kiyosaki, the Grunt will fall asleep in his foxhole happy.