Oh really? Apparently we should all pull our money out of the market if we plan on funding our retirement or our child’s college education according to his latest drivel over at Yahoo! Finance. The opening line is just classic since he immediately references one of his literary works (if you can call it that):
When my book “Rich Dad’s Prophecy” was released in 2002, most financial newspapers and magazines trashed it because I discussed a looming stock market crash. Ironically, much of what I predicted in the book is coming true earlier than I expected.
Right, I see it clearly now. Since 2003 the DJIA has gone from around the 8,000 level to currently over 12,000. A 50% gain over the course of four years is not satisfactory I guess. In this piece he admits the market was rallying but claimed that while the market was going up the value was actually decreasing. Huh?
Well look at the awesome comparison he uses to prove it: he pulls out the returns of gold and oil since 1996 in order to “predict the future”. Oh my goodness, oil is up 600% and gold is up 200%. Shoot, why didn’t I put all of my retirement into a few commodities instead of the stock market market? What I really like is the comparison of gold to the DJIA in this ridiculous chart.It shows that while the Dow is going up it isn’t going up as fast as gold so that means the Dow is actually crashing.
That’s right folks, apparently if you compare the purchasing power of a commodity against the Dow it will allow you to predict the future. According to his findings I was actually losing money even though my retirement accounts have been seeing 10-16% returns over the last few years. I wonder what would happen if we chart the relationship of pork bellies or soybeans and the Dow? Would the results be different?
To Kiyosaki’s credit he does bring up an important point about the purchasing power of the dollar, but this is an extremely overblown and poorly executed attempt at pushing his agenda. Inflation is certainly a concern and it always has been and always will be. But comparing the Dow to the price of gold in order to construe your findings to prove that you need to make 15% in the stock market each year just to break even is downright asinine. If we carried around gold bullion in our pockets as a form of currency he may have a valid concern.
So if you ever want to retire you should get out of the market and buy gold, real estate and other hard assets. Better yet, just buy his books and all your problems will be solved.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.