Rich Dad's Prophecy: Book Review
Let's See if Rich Dad Was Right
Robert Kiyosaki, the famous author of the Rich Dad, Poor Dad series, in his fifth book, Rich Dad’s Prophecy, discusses an impending financial disaster. Published in 2002 by Warner Business Books, and co-authored with Karen Lechter, the book details much about a coming financial crisis. Maybe he was talking about the financial meltdown that began in December 2007 and was well known to the world 6 months later, or maybe he is discussing an even greater financial distress yet to come. Whichever the case, reading the cover had me instantly intrigued.
Actually, I didn’t particularly like the title, as the word “prophecy” tends to connote religious fanaticism, yet this is not the case for this book. He does, however, promote a bit of healthy fear, which, if he’s correct, is really prudence. So, given his past successes, I gave this book a chance, and was not disappointed.
Robert Kiyosaki warns almost from the outset about a panic in the stock market that will be caused sometime no later than 2016, due specifically to a tax law called ERISA, that was signed in the early 1970’s. This tax law, according to Kiyosaki’s “rich dad,” will force millions into the stock market and, by their lack of knowledge of this market, to retreat from it as soon as they are legally able to do so. This mass migration from the markets will cause a plummet in demand, and precipitate a crash. Thus, as he describes it, the market crash of 2008 (and counting) is not the same crash, particularly as the genesis of the 2008 crash was not due to Wall Street (though the market players certainly are a bit culpable of worsening the event).
The book is rather repetitious, which is acknowledged by the words “please allow me a little repetition,” on page 213. This could have its upside or downside, depending upon the reader. Those who are new to investing will profit by this superfluous knowledge, whereas the more wizened investor may find the repetition a bit tedious and even condescending. Further, some of the chapters are self-endorsements, promoting the many books and products that Kiyosaki’s company offers, to the point that a few chapters read almost like infomercials.
Entailed in this information are numerous suggestions as to how to make money based on the ideas of the two authors in relation to the coming crash. Some highlights include humorous stories, such as found on page 135 of the hardback version, in which Kiyosaki asks the reader to consider what kind of person she is. Out of the eighteen possibilities, the eleventh cites “animal lover” and proceeds from there (though humorous, it makes a good point). As well, there is much emphasis of steering clear of stock investment, while at other places, the authors give stock advice, a strange point, given his admission that he has little money in such securities.
In fact, Kiyosaki makes some statements that are a bit disturbing for the average stock trader, such as that diversification is only for those ignorant of the market and its workings. To back this and other ideas, quotes by the world’s most famous stock investor, Warren Buffett, are sprinkled heavily throughout the many chapters. While I disagree with Kiyosaki on his ideas against diversification, I heartily support his assertion that anyone investing in any system of monetary return should be well educated.
In fact, this is Robert Kiyosaki’s greatest contribution to the literature of investing: that education is key, and that the time spent educating oneself about money is an investment in of itself.
Other points of interest include his chapter on assumptions, which could apply to most aspects of life, but are certainly greatly relevant to investment of all types, which is all-too-often operated under emotional considerations, rather than the logical, detached reasoning that is required. Further, he presents an almost spiritual quality to part of his narrative when he discusses losing his business and his apartment. Not wishing to dabble in metaphysics, the money-making guru likens prayer (as a sole resource towards wealth acquisition) to spiritual welfare (cf p. 134). Moreover, an excellent lesson is presented in chapter 10, which is on self-control, the root of all success and failure.
Finally, what can be best said of Kiyosaki (and Lechter) is that the books that they produce are absolutely inspiring. Kiyosaki has been accused of many things, but he can never be called boring. His words tend to stir the mental pot that seeks financial bliss in a way that few authors do. For instance, on page 103 he writes, “If you have a high financial IQ, what seems risky to most people will be safe to you….” If correct, Kiyosaki may just be a financial wizard posing as an ordinary businessman.
Even if you’ve never read any of the Rich Dad, Poor Dad books before, though I’d recommend the first of the series to be read before any of the others, this book too, Rich Dad’s Prophecy will inspire, educate, and tickle you.