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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

Predator's Ball: Cashing In Without Getting Fleeced

by Robert Kiyosaki

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Posted on Wednesday, February 18, 2009, 12:00AM

This will be a politically incorrect article. It may seem unkind, insensitive, and cruel given the fact that so many people are hurting financially. Many have lost their jobs, homes, retirement security, and hope. Yet  -- if you can see beyond today and let intelligence, not emotion, rule the day -- now is the time to position yourself for riches.

You see, the biggest predator's ball in history is in its planning stages and invitations are being sent out. For about a year now, friends and associates have been inviting me to join their investment pools. One friend has over a billion dollars in cash sitting on the sidelines. Last night, another friend said that a large bank had invited him to bid on their portfolio of foreclosures. The minimum price: $30 million in cash. He estimated that for that price we could acquire over a billion in distressed properties. For $1 million, I could buy a ticket to the party. I passed on the deal, saying the price was out of my league.

Many people got into trouble when times were good. For example, some of my family's friends placed all their money with a financial planner during the boom years, believing the standard sales pitch that the market goes up an average of 8 percent a year -- even though it doesn't. For over 20 years, I encouraged them to learn about investing rather than blindly turn over their money to a stranger. Today, they have lost over 45 percent of their portfolio in the last two years. They are not rich people. Now they want to know what to do.

Two Types of Predator's Balls

My point is this: There are two types of predator's balls. There are balls when times are good. My family's friends were victims of this type of exploitation -- when predators get you excited about rising markets.

For example, when real estate was soaring in price, predators known as flippers emerged and began selling houses to people at sky-high prices -- many of whom had no business buying a home.

There are also predator's balls for bad times. These take advantage of the exploitations that occurred during the good times. I like the bad-times predator's balls the best because deals are plentiful, people are humble, prices are low, and opportunities abound. I hope this party lasts for at least five years. I am investing more today than I was two years ago.

The Best of Times -- the Worst of Times

In 1859, Charles Dickens wrote in 'A Tale of Two Cities':

"It was the best of times, it was the worst of times; it was the age of wisdom; it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair ..."

For millions of people this is the dead of winter. If any of you who are reading this article are going through tough financial straits, I offer you this article and passage as encouragement to keep going -- to make the worst of times your best of times.

As the economy worsens, I am seeing a new predator's ball emerging - one for suckers. This is the ball for gold and silver. If you have been watching television lately, you will have seen ads advising people to send in their old gold jewelry for cash.
Only suckers would do that... but as you know, a sucker is born every minute. I also see ads advertising 100-percent-pure 24-carat gold-plated coins for $29.95. Obviously, the key words are gold-plated. Only a moron would invest in a gold-plated coin. The only way that person can sell that gold-plated coin is by finding another moron -- which I'm sure can be done, especially as the gold and silver markets pick up steam.

A Sign of Bad Business

In Phoenix, a businessman who was convicted on fraud charges recently opened up a new gold coin shop. He had been banned from being in the gold and silver business for ten years. His timing was good because his ten years were up and now he is sending invitations to his party. Invitations are expensive. He has prime retail space, marketing expenses related to advertising heavily on radio and television, half-page ads in newspapers, major yellow page ads, and a slick Web site. This is how predators send out invitations. Any time an investment company has to spend heavily on advertising, it's probably a bad business in which to invest. You may recall that many mutual fund and real estate companies were sending out plenty of invitations during the last stock and real estate predator's balls.

I believe that gold and silver are good investments -- but their prices are at all-time highs, which means it is time to be cautious, not foolish. Today, I hear financial experts on television advising people to buy gold. These are the same guys who were recommending stocks and mutual funds less than two years ago. So be very careful as the gold and silver markets begin their next climb. I am still buying gold and silver but I did most of my buying when gold was at $300 an ounce in 2000 and 2001.

Many gold and silver experts will recommend you buy numismatic coins -- rare and old coins. If you are not a rare coin expert, I'd encourage you to stay away from them. New investors often pay too much for rare coins that are not really rare. If you are new to gold or silver, I recommend you buy as close as possible to the international spot price of the metals, watching out for premiums and commissions per coin. Buy bars or blanks, rather than coins, if premiums are too high. Watch out for scams. If the person you are buying from makes you uneasy, run. Take delivery when you hand over your money. Keep coins or bars in a bank or safe.

A good book I recommend is 'Investing In Gold and Silver' by Mike Maloney. He is one of my personal advisors on the subject, and his book is worth its price in gold.

In closing, I'll leave you with this thought: Remember that when one predator's ball ends, another is starting. If you plan on attending, be sure you are a predator, not the main course.

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300 Comments

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  • Tom - Sunday, April 19, 2009, 3:54PM ET  Report Abuse

    • Overall: 5/5

    Great Article

  • Yahoo! Finance User - Tuesday, April 14, 2009, 4:32PM ET  Report Abuse

    • Overall: 5/5

    Great article by R Kiyosaki. Thank you for being original and writing about things that matter to us, versus just saying what we want to hear. Thank You.

  • Yahoo! Finance User - Monday, April 13, 2009, 10:28AM ET  Report Abuse

    • Overall: 1/5

    RK is a fraud and people need to know. http://www.johntreed.com/Kiyosaki.html

  • Yahoo! Finance User - Thursday, April 9, 2009, 12:21AM ET  Report Abuse

    • Overall: 4/5

    Great article RK. You are right on the money, although the word Predator is used out of context. Those who will succeed in this environment are those who have real financial education. Not by preying on others, but by eliminating debt, building liquidity and protecting their wealth. For instance, how many Americans have opened a Mortage Savings Account? Almost none, because most have never heard of this powerful vehicle that Australians and Europeans have used for decades to save hundreds of thousands of dollars in mortgage interest and become completely debt free in less than 10 years instead of 30. If you are unfamiliar with MSA's google "Mortgage Savings Accounts" or research www.maxhouse.com.

  • John C - Monday, April 6, 2009, 10:43PM ET  Report Abuse

    • Overall: 1/5

    I guess you all know that Dickens got paid by the word. That explains some of his more lengthy and hard-to-understand tomes. So must Mr. Kawasaki here.

  • Srini Dodd - Saturday, April 4, 2009, 4:15AM ET  Report Abuse

    • Overall: 4/5

    Well.It's all said and done,noble winners have not been able to prove their credentials effectively in these turbulent times.Mr. Arnold is also an ignored person about his state and country 6 years ago when Bush picked his second term as President.Where the Dollars are moving?.1.Mexico telephone tycoon(illegal migrants buy phone cards to remain in touch with their families back home).2.Real Estate brokers who had a chance to build wealth by paying paltry $8 per hour replacing $30 US labor. 3.Real Estate mortgage firms .By exchanging premium priced loans with almost fradulent loans siphoned out of banks. 4.Excessive show room builtup for cars. A show room for every 2000 people.Paving way to manufacturing job losses. 5.Bad ethics.Loss of quality,luxury(hummer like fuel guzzlers) leaving crude oil sensitive country. 6.Unwanted fuel demand out of military exercise in Iraq,Afghanistan wars . 7.Unwanted luxuries on top tier operations ignoring ratio of direct and indirect costs control. 8.Tiotal freedom,relaxation by Bush administration in every aspect with out foresight. 9.1997-2008 are bad times(Clinton is also responsible. 10.President Obama has lot to do.One can only realize benefits in 2012. Wakeup.Dont try to be rich.Try to survive

  • Yahoo! Finance User - Wednesday, April 1, 2009, 6:41PM ET  Report Abuse

    • Overall: 1/5

    As a financial counselor and investor of 30 years. I have made big money and lost big money. for me it is easy to recognize the real financial gurus and the snake oil salesmen. Those that say they only make big money are the snake oil salesmen. Investing is taking risk and no one is ever correct 100% of the time. Robert tends to speak down to people and lend himself to others as the expert. It is my observation his followers are not wel educated in the ways of financial investing based on their comments here. This article is absolute baby dribble and has no educational value to financially savvy people as myself. I hate to break the news to most of you but most of you with any common sense can invest with more financial savvy than Robert. He is only a book salesman that happens to sell millions of books to that earns him millions of dollars. Suckers by his books that allow Robert to live his lavish life style. Robert is a smart snake oil salesman and I give him props for knowing enough to pilfer money from stupid people begging for any financial wisdom without learning anything about the author. Robert is a true capitalist and for that he is savvy but not for his writing or investment advice.

  • binderzz - Wednesday, April 1, 2009, 3:47AM ET  Report Abuse

    • Overall: 5/5

    Some of us are sharks and some of us are bait? It doesn't speak too highly of modern society if humanity has been reduced down to only winners/losers. I also took the "sell us your gold jewelry" and "gold plated coin" TV commercials as proof that gold has peaked. Better luck next time, goldbugs!!

  • Kaheem - Saturday, March 28, 2009, 9:47AM ET  Report Abuse

    • Overall: 4/5

    This is a good article RK. To bad you made all of the conservatives mad. This is about people not politics. Don't be mad because the conservative party is over. Finally!!

  • EJS - Friday, March 27, 2009, 10:00AM ET  Report Abuse

    • Overall: 2/5

    ok, predator is a new word for contrarian, sheer genius. love the recent commercials touting robert as predicting this financial crisis six years ago. sure he did. go to one of his free seminars, because he just wants to help people, sure he does. if he is as smart and savvy as he plays himself to be and as the ignoramouses who think he is too, then why would the $1million for the ball be out of his league? if he did predict the crash, as his commercial states, wouldn't you think he'd have cashed in royally? are there any objective, thinking people out there or are you all just obama fans? my goodness you fools.

  • Yahoo! Finance User - Saturday, March 21, 2009, 12:38AM ET  Report Abuse

    • Overall: 3/5

    I'm glad your articles are getting more practical rather than pure theory. Would you recommend getting greedy in the stock/mutual fund market now that others are fearful?

  • PB - Friday, March 20, 2009, 4:33PM ET  Report Abuse

    • Overall: 4/5

    Robert Kiyosaki always gives out sound advice for every investor and does a great job of wrapping it in a humourous, memorable, and easily understood context for those of us who have a hard time digesting and reading between the lines of other investment advice columnists.

  • Yahoo! Finance User - Thursday, March 19, 2009, 9:30AM ET  Report Abuse

    • Overall: 5/5

    Those who complain about RK and classify him as a talking head are usually those that have not studied his materials or background and therefore are spouting ignorance. From one single generation self made millionaire... do yourselves a favor and do a little research before you share your wisdom with the world. I respect and appreciate Robert's viewpoints and have always found them to be valuable. I practice many of his ideas and continue to have a healthy ROI in those areas... results - not complaints - should demand our attention.

  • Yahoo! Finance User - Thursday, March 19, 2009, 8:22AM ET  Report Abuse

    • Overall: 2/5

    None of all the democratic and secular people of Turkey approves Obama's visit to Turkey which will mean to support the Islamic fascist dictatorianship of Recep Tayyip government. And we also wonder how much grand was embedded in Mrs Clinton's pocket when she came Turkey to support Tayyip few weeks ago.

  • docholidaze - Wednesday, March 18, 2009, 12:15AM ET  Report Abuse

    • Overall: 1/5

    While I appreciate his concept of the cash flow quadrant, Mr.Kiyosaki is just another of the "talking heads". Infomercials like this one, are part of the problem. Fiscal education has been absent, and so the talking heads unfortunately move the American markets. These people are as much of the problem as the management teams and boards of directors of AIG and the banking industry. Please do society a favor and start publishing distinct facts rather than opinions or marketing pitches like this one. Stop giving these people a forum to enhance their own significance.

  • Yahoo! Finance User - Tuesday, March 17, 2009, 1:50PM ET  Report Abuse

    • Overall: 1/5

    ROBERT HAS BEEN RUNNING HIS OWN PREDATOR'S BALL FOR SEVERAL YEARS. BUY REAL ESTATE, DON'T BUY REAL ESTATE. BUY STOCKS, DON'T BUY STOCKS. BUY SILVER, DON'T BUY SILVER. STILL, THE DUMBEST AMONG US DESERVE TO BE FLEECED SO I GUESS ROB HAS A LEGITIMATE ROLE TO PLAY.

  • Yahoo! Finance User - Monday, March 16, 2009, 2:46PM ET  Report Abuse

    • Overall: 4/5

    I'm glad someone is putting out the warning. We have too many talking heads on TV without content or logic.

  • keith_kurtz - Monday, March 16, 2009, 1:21AM ET  Report Abuse

    • Overall: 4/5

    It's good. Except I think the gold and silver prices rising are far from over. The economy would have to recuperate fast, and that isn't going to happen. People can't afford more debt, and that in itself is going to create more money for the banks to lend. Unless wages increase dramatically the economy will collapse.

  • Ian - Sunday, March 15, 2009, 8:05AM ET  Report Abuse

    • Overall: 1/5

    These articles should be called "Robert fabricates stories about investments he didn't make."

  • el Patalán - Sunday, March 15, 2009, 1:29AM ET  Report Abuse

    • Overall: 2/5

    Uuuh? Six months ago gold and silver were the best investments,,, now are the worst... and prices are more or less similar... what happened with the "God's money"?

  • Yahoo! Finance User - Saturday, March 14, 2009, 11:08PM ET  Report Abuse

    • Overall: 5/5

    Well said RK. For every person looking to cash in on peoples misfortunes and ignorance, there are hundreds of people helping and giving instead of taking from them.

  • Yahoo! Finance User - Saturday, March 14, 2009, 12:31PM ET  Report Abuse

    • Overall: 1/5

    Another nonsensical article from this self-serving charlatan. Too bad both his rich dad and poor dad didn't join forces to kick this moron's butt.

  • __A_YAHOO_USER__ - Friday, March 13, 2009, 11:08AM ET  Report Abuse

    • Overall: 5/5

    This is a great article on the problem in America. Great writing!

  • Yahoo! Finance User - Friday, March 13, 2009, 7:08AM ET  Report Abuse

    • Overall: 5/5

    As usual RK is right on. It's not surprising how quickly you are forced to react to a deal too. They don't want you to be able to think...or research. They want you to make an emotional response about a financial decision...never a good idea.

  • Fenando P - Friday, March 13, 2009, 4:27AM ET  Report Abuse

    • Overall: 5/5

    we need this kind of education more especially in this time of crisis. I salute to Robert and his partners for sharing their knowlegde... God bless you!

  • Yahoo! Finance User - Friday, March 13, 2009, 3:27AM ET  Report Abuse

    • Overall: 1/5

    I might add that when RK was asked who he supported for president, he leaned to Obama, the wizard of the financial world. He is the leading president in making the stock market go down more than any other in history.

  • Yahoo! Finance User - Friday, March 13, 2009, 12:27AM ET  Report Abuse

    • Overall: 4/5

    Good article. Predator is somewhat misleading. Those who will do well in the coming months and years are those who have positioned themselves to ride the big wave that is coming instead of being crushed by it. For those who have the knowledge and know how to position themselves it will be a great ride, for those who don't it will be ugly. It's not to late to get a financial education and position yourself to gain from this depression which will be disastrous for those who don't. If you don't have the knowledge or you are not yet in position, researching www.maxhouse.com is a good place to start.

  • Yahoo! Finance User - Monday, March 9, 2009, 11:52PM ET  Report Abuse

    • Overall: 4/5

    RK has a point of view that is valid. Do your home work! There are no short cuts. I haven't seen anyone get it totally right so far. And remember that greed will get you into to trouble every time. I personally have made and lost millions. Some times it was the luck of the draw and sometimes it was bad timing. But as I got older and wiser I learned it's not what you make, it's what you keep that counts. Investing now has become a combination of understanding, patience and experience, which together have produced a positive outcome even when the world is falling apart. There will be financial winners from all of this fall out, it won't be hard to make money. RK and others will pontificate about the issues and the timing, some will be more right than others. But this one thing we need to remember, if we can't take it with us, why are we so possessed by the pursuit?

  • Richman - Monday, March 9, 2009, 12:31AM ET  Report Abuse

    • Overall: 5/5

    As always, read between the lines. We really have seen those "Gold kit" commercials, and this is really happening. If a compay cannot get cash, then credit is king. Watch for the companies that have very good credit; those are the ones that will start to do well when the banks decide to start lending...

  • Dino - Sunday, March 8, 2009, 10:37PM ET  Report Abuse

    • Overall: 4/5

    I like this guy. Straight shooter. I do remember him telling readers to invest in silver many moons ago. Well done, sport.

Showing comments 6-35 of 300<< PreviousNext >>
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