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CASH2GOLD is a private investment club and social network for new investors. Our main goal is – to achieve the highest returns possible for both ourselves and our members. We apply different methods of trading to generate returns. Our main line of investments is the Gold, Forex, Silver & Real Estate Market. Over the last 7 years we have fine tuned our system and trading methods to generate the highest possible ROI, while minimizing the amount of the risk and loss you will be exposed to as a new investor.
RICH DAD, POOR DAD by Robert Kiyasaki
A lot of people have read Robert Kiyosaki's books (and he has a lot of them), but this is the one that started them all.
I think what endears people to Rich Dad Poor Dad is the story. It seems to me that whenever a non-fiction book teaches with stories, it does very well. So, if you're going to write a non-fiction book, weave your info into a story.
Rich Dad Poor Dad is the story of Robert learning the habits of the rich from his best friend's dad. Robert's own dad was a highly paid, highly educated government official, but who ended up poor (this is his "poor dad"). His best friend's dad was not highly educated, but he started lots of businesses, bought lots of real estate, and invested in stocks. He is "rich dad".
Some lessons or themes that keep coming up:
*School prepares you for a job while financial education prepares you for better financial habits that lead to a more prosperous life
*The rich invest in ways that the poor and middle class do not
*The rich invest in assets that produce class flow, and then reinvest that cash flow into other assets
*The poor invest in liabilities, or things that take money out of their pockets
*The middle class tend to go to school, get a job, buy everything on credit, get raises, then buy bigger houses and nicer cars, under-save and under-invest, and then retire on less than what they should have.
*There are 3 kinds of income:
-Earned income (what you make when you're there)
-Passive income (money that comes to you when you're not there…that can come through businesses, real estate income, intellectual property, etc)
-Portfolio income (money that also comes when you're not there…but specifically from stocks, mutual funds, and other such paper investments)
As it turns out, Robert didn't go on to become a rich guy too soon into his adult years, like his best buddy did. Robert went into the Navy to learn how to sail ships, then to the Marines to fly helicopters in the Vietnam war. I might have the timeline wrong, but he he was a top-selling Xerox sales rep for several years. And then he went on to start a successful business importing/selling those Velcro nylon surfer wallets from the eighties. Remember those? After a few years, that business went bust.
Eventually he made the jump into buying assets…income producing real estate…and within 8 to 10 years, he and is wife retired. Then six months later he came out of retirement to start his financial education business…which includes his books, board games, tapes, seminars, etc. In reality, it sounds like he's started a whole ton of other businesses too, but that's what I've pieced together from other books of his that I've read. Notice that most of his activities center around passive income?
It's a great and easy read and should shock you out of your usual way of looking at money. Another one of his books that I like a lot is one he didn't even write by himself…aptly named "Success Stories". It's a collection stories by many of Robert's students that have taken his advice and who started businesses or are collecting assets that produce cash flow.
There's so much more that can be said, but it's time for you to start the adventure of reading a new book. Try to think of "Rich Dad Poor Dad" as financial education; it will make the purchase that much easier to justify.
Are you an investor? Is your money currently working for you? Oprah is an investor and she has her money working for her every minute of the day …right now she is making approximately $460 a minute by reinvesting a portion of her income every month. Now, I don't know about you but that to me is really having your money work for you.
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Gold. Rare, beautiful, and unique. Treasured as a store of value for thousands of years, it is an important and secure asset. It has maintained its long term value, is not directly affected by the economic policies of individual countries and doesn't depend on a 'promise to pay'.
Completely free of credit risk, although it bears a market risk gold has always been a secure refuge in unsettled times. Its ‘safe haven’ attributes attract wise investors. Gold has proved itself to be an effective way to manage wealth.
For at least 200 years the price of gold has kept pace with inflation. Another important reason to invest in gold is its consistent delivery within a portfolio of assets. Its performance tends to move independently of other investments and of key economic indicators. Even a small weighting of gold in an investment portfolio can help reduce overall risk.
Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class.
Portfolios that contain gold are generally more robust and better able to cope with market uncertainties than those that don't. Adding gold to a portfolio introduces an entirely different class of asset.
Gold is unusual because it is both a commodity and a monetary asset. It is an 'effective diversifier' because its performance tends to move independently of other investments and key economic indicators.
Studies have shown that traditional diversifiers (such as bonds and alternative assets) often fail during times of market stress or instability. Even a small allocation of gold has been proven to significantly improve the consistency of portfolio performance during both stable and unstable financial periods.
Gold improves the stability and predictability of returns. It is not correlated with other assets because the gold price is not driven by the same factors that drive the performance of other assets. Gold is also significantly less volatile than practically all equity indices.
The value of gold, in terms of real goods and services that it can buy,has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined.
Traditionally, access to the gold market has been through: investment in physical gold, usually as gold coins or small bars,or, for larger quantities, by way of the over the counter market; gold futures and options; gold mining equities, often packaged in gold-oriented mutual funds.
Gold at $1000 : Is It An Outrageous Bargain?
"GOLD CONTINUES to climb…stoked by inflation worries," says a headline in the International Herald Tribune, writes Bill Bonner in his Daily Reckoning.
But is gold above $1,000 a bargain…or a trap? Or both.
We begin by asking: where's the inflation? We don't see any inflation. What we do see is deflation.
Barclays Capital says Gold could go to $1,500. We don't know where they got that number. It could go to $15,000 for all we know. Or it could go down, too.
Our guess is that it will go down enough scare the bejesus out of speculators. Then, it will soar. But, hey, we're just guessing – along with everyone else.
Sooner or later Gold is probably headed to the lunatic moon. We're sticking with the yellow metal. We don't want to miss that ride.
But when?
Ah…we're going to stick our necks out and say "eventually". We're sure we're right about this. Just don't ask us for more precision; we have none. And what bothers us is that between eventually and now there could be a lot of time and a lot of trouble. And one trouble that could come up pretty fast is another crash in the stock market.
If the stock markets of the world take another dive…like they did last year…gold will probably go down with them. Not as much, but down nonetheless. So, if we were speculating…we'd probably be short gold and short stocks too. We'd bet against bonds too – even though we think they will probably go up in the short run. The smart, long term money – in both stocks and bonds – is probably on the short side.
Here at The Daily Reckoning, however, we never speculate…except in print. As to ideas about how the world works we have plenty. We speculate daily. As to gold, stocks and commodities, we prefer to hold onto our long-term positions.
What seems fairly sure to us is that this recovery is a fraud. It's a mountebank and a flimflam. And now approaches a moment of truth – earnings announcements. Stock market investors bid up shares on the theory that sales and profits would rise.
Will they? We don't think so. We think sales are going to be disappointing…and earnings will be even worse. If so, we'll see analysts begin to change their expectations…and announce that the results are "not as bad as expected."
If we get a few really bad announcements – with results much worse than expected – it could sink the rally. Then again, if we're surprised with exceptionally good reports…it could send the market in the other direction.
Good results will also cause us here at The Daily Reckoning to question our position. Maybe the economy is not sinking into a chronic depression, after all. Could we be wrong?
Ha ha…are you kidding, dear reader? Of course, we can be wrong. When we were younger we were uncertain about things. But now that we're older, we're not so sure.
Here is what we're pretty sure about:
#1. The credit cycle has topped out
Americans are saving – think of the poor boomers, 10 years older but not a penny richer than they were in 1999. Stocks have gone nowhere but down in real terms. Houses hit a high in 2006…now they're off 30% and still going down. Jobs? Forget it…there are already 15 million people who are unemployed and about 200,000 more every month. The job market is unlikely to recover for another 6-13 years; that is, after many of the boomers are retired! And if you are lucky enough to have a job, you're not likely to get a raise…not with so much spare capacity in the labor market.
Under those conditions, a consumer boom is very unlikely.
#2. A period of credit contraction is deflationary
Prices go down as demand falls. Buyers disappear from the malls that once knew them, while the factories that produce stuff grow dusty and quiet.
But we know the feds hate falling prices. And we know they are taking extraordinary actions to get prices to go up. So far, their efforts have been a giant flop. Prices are falling in the United States at the fastest pace since the '50s.
Most of the feds' efforts have been directed towards keeping the bankers fat and happy…and getting themselves a bigger share of America's output. They took funds designed to relaunch the US economy, for example, and used them to buy themselves a big position in the auto industry, the financial industry and the insurance industry.
#3. The feds are now much more aggressive
We know that by the way they conducted themselves in those banking affairs…throwing their weight around in the private sector as never before.
What we don't know is how this affects markets in the short term. So far, consumer prices are falling, but the stock market is enjoying a bounce. It is a real, new bull market? Or just a bear market bounce? It is probably a bear market bounce…but it has been going for long enough that we have to at least consider the idea that it is a genuine bull market. That's why the numbers from this quarter are important…they'll tell us if the companies themselves are expanding earnings fast enough to justify investors' optimism.
#4. We know there is a whole lot of 'flation going on
We are just unable to tell you what kind of 'flation it is. The monetary base is way up – it increased by $1 trillion in the last 12 months. But the money-in-circulation has barely budged. The feds give the banks overnight loans at practically zero interest. Then, the banks lend it back to the feds at nearly 4% more.
What happens to it then? Well, what do you think…it is wasted on typical federal government scams and humbugs.
So, relatively little of the money actually ends up in the consumer economy. And so, we can't tell you whether the 'flation will have a "in" prefix or a "de" prefix. They're just two letters. But they will make a whole alphabet of difference to the economy and to your investments.
#5. The people running America's financial policies are jackasses
Most important of all, and we are dead sure. We say it with all due respect, which is probably not much. They have only one idea – and it is a bad one. They think economies are improved by more consumer spending. They don't seem to care why consumers occasionally cut back on their spending. All that matters to them is finding ways to get the consumer shopping again. So they try tax cuts and government spending…bailouts and boondoggles…zero interest lending and federal takeovers…cash for clunkers, cash for houses, cash for employees…trillions worth of claptrap and folderol.
But what a nuisance! The fool consumer still won't shop!
The feds are determined to keep trying, however. That's why we can be pretty sure that, eventually, they'll get inflation rates up. One way or another. And then, gold at $1000 will seem like an outrageous bargain.
"If there's an easier way to buy investment gold, I've yet to find it," says one BullionVault customer. Find out why if you're Ready to Buy Gold…
Bill Bonner, 09 Oct '09
