- Robert Kiyosaki, author of the best-selling book “Rich Dad, Poor Dad,” wants to have his money as far away from Wall Street as possible.
- He thinks the US is “obviously” on a one-way street to depression as the coronavirus exposes inherent weakness and inefficiences that have built up within corporations.
- “Don’t be stupid right now,” Kiyosaki said.
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“We’ve been warning people for years.”
That’s what Robert Kiyosaki — the legendary author of “Rich Dad, Poor Dad,” one of the top-selling personal finance books of all time — said on the “The Pomp Podcast.” He was referring to the disarray in financial markets that’s been prompted by the coronavirus.
Kiyosaki’s long-felt uneasiness is easy to explain: He’s seen questionable practices being implemented on Wall Street for years — and he hasn’t been particularly keen to put his hard-earned dollars to work in an environment he doesn’t trust.
He’s instead loaded up on assets that are either largely immune from the broader financial system, or outside of it entirely. Kiyosaki is especially skeptical of the stock market.
His reluctance to investing in stocks and other traditional risk assets stems from what he describes as a toxic combination of bad leadership, short-termism, easy money, and mismanagement. He’s particularly perturbed by the level of debt taken by companies without a clear long-term plan.
In Kiyosaki’s mind, the coronavirus outbreak was simply the final catalyst that kickstarted a broader unwind and exposed the bad actors.
“They’ve basically taken AAA corporations, dropped them to BBB, next stop is junk — and those are CEOs of Ford Motor Company, AT&T, GE, IBM,” he said. “They’ve ripped off not only you and I, they’ve ripped off the pensions; they’ve ripped off their shareholders; and they’ve ripped off their employees. They’re bad leaders.”
What Kiyosaki is implying is that corporations have long feasted on easy lending conditions to amass unsustainable debt loads ill-equipped for a sharp economic downturn. He also argues that — through practices like share buybacks — these firms are boosting stock prices at the expense of reinvestment, then hitting the eject button when the going gets tough.
Both practices have drawn the ire of experts since the coronavirus meltdown began in earnest. Firms like Charles Schwab have warned of BBB-rated bonds — which sit on the lowest rung of investment grade and are at risk of downgrades to junk — swelling to a record portion of the market.
Meanwhile, share repurchases — long utilized by companies to boost stock prices during times devoid of other positive catalysts — have come under renewed fire. As industries such as airlines clamor for a federal bailout, many high-profile officials are trying to ensure that money can’t be used for buybacks.
“The big crash is in shadow banking system and corporate credit,” he said. “Trust in the CEO who’s borrowing corporate money, taking a corporation — like GE — from AAA to BBB, buying shares, boosting their share price, exiting with stock options … paying capital gains tax versus ordinary income taxes. The average person has no idea what I just said. What I’m saying is: You just got ripped off.”
Today, the confluence of coronavirus, a shutdown economy, and overly-leveraged corporations leads Kiyosaki to only one conclusion: “Obviously, we’re going for a depression.”
Where he’s putting his cash to work
Back in January, due to his inherent skepticism over the actions he was seeing manifest on Wall Street, Kiyosaki warned that investors were “being set up” and that he “wouldn’t touch mutual funds, ETFs, and stocks.” Today, he’s positioning his capital as far away from Wall Street as possible.
“We were prepared for it,” he said. “It’s gold, silver, and bitcoin. The reason is your off the central banking system.”
Kiyosaki thinks the extreme stimulus measures taken by the Federal Reserve in recent months are destroying the soundness of the US dollar. In fact, he refers to the Fed as a highly-educated “cartel owned by the richest people in the planet.”
With the implementation of trillions more in economic relief coming down the pike, Kiyosaki wants to make sure his assets’ value won’t be eroded the Fed’s printing press.
What’s more, in addition to the assets mentioned above, Kiyosaki also advocates for an investment in real estate to help weather the impending economic storm.
“With this the crash coming up again, there’s going to be a lot of good real estate coming up” he said.
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