The well-known author Robert Kiyosaki recommends us to invest in gold, silver, and bitcoin. We reflect on his arguments. We weigh what he says. What does he really say?
Robert Kiyosaki, author of the bestseller Rich Dad Poor Dad, is more of a financial education guru than a successful investor. I mean, Kiyosaki is not a Warren Buffett. We know him mainly from his books, seminars and interviews. In fact, it could be said that his main business is talking about business and investments. Its merit lies in explaining basic concepts in a very simple way to the general public. In fact, he’s not bad at what he does.
My friend Robert Kiyosaki, for many years, has belonged to the Team “The Cash is Trash” (Cash is garbage). He has been predicting the collapse of the dollar for decades. He has always been a proponent of real estate, gold and silver as an investment. And, lately, he has joined the promotion of Bitcoin.
According to Kiyosaki, “savers are losers”. In a fairly recent tweet, Robert reiterates that you should invest in REAL MONEY (gold, silver, Bitcoin) because inflation is not 7%, but 16%. Well, this is obviously what people want to hear. Here you are appealing to a very particular sector. I am referring of course to the libertarian and conservative sectors who think that the dollar is not “real money” and prefer hard alternatives instead. For this sector, what Kiyosaki said is evident. I mean, it’s kind of an unquestionable truth.
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For the left, it is also evident that any investment must take into account the moral implications around the environment, social and government. This implies, for example, that the number of women or African-Americans on a board of directors is as relevant to the investor as the company’s income. For the right and many centrists, that is absurd. After all, merit and profitability should be the criteria used when making decisions.
What’s going on? What happens is the arrival of the idiosyncratic investor. This investor invests following dogmas and promoting political agendas. The phrase “REAL MONEY” strikes a chord that stirs anti-establishment sentiments in the context of identity politics.
Idiosyncratic bias in relation to our investments often works as a distraction. Among so much fighting, we forget that most of us invest to earn money and nothing else. Clever. As simple as that. Not all of us want to be social justice of the revolution woke. And not all of us want to be the heroes of the libertarian utopia in the crusade against the state. Some of us just want to earn our daily bread. And, to achieve that, it is required to accept reality and move on. Abide by the rules of the games in the most pragmatic and objective way possible.
During this period of volatility and uncertainty, investors are choosing cash and bonds to add greater stability and predictability to their portfolios. During this same period, assets such as Big Tech, Bitcoin, gold and silver have fallen significantly. In fact, the investors who were lucky enough to sell early are the ones in a better position today.
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About unrealized losses, you have to understand something. Unrealized losses are also losses in more ways than one. And that goes for both trader as for the long-term investor. First, these losses remind us that we pay dearly for an asset that is much cheaper today. Second, waiting for the recovery we are missing opportunities. Why? Because It is always better to have an unreturning or stable asset than one that falls significantly over the same period.
Of course, the idiosyncratic investor does not view unrealized losses in the same way. For these investors, losing money is a leap of faith. In fact, they feel more heroic by stretching out their losses.. Of course, the unrealized losses in the case of a non-earning asset are very different from the unrealized losses in the case of a earning asset. Earning assets have underlying assets and income that are not always reflected in their market price. Then the investor can recover the investment without depending on the market price. This is not always the case for non-earning assets.
The best time to buy is at the end of a bear cycle and the beginning of a bull cycle. And, to better take advantage of the moment, you have to have cash available. What is not always possible, if we have decided to extend our losses waiting for a recovery.
It is best to buy at the best possible price and sell at the best possible price. The hard money debate is actually a distraction. Now, Robert Kiyosaki also tells us about the future of demand. He tells us about pensions. Here I totally agree. The growing interest of institutional capital means higher demand in the future. And, thanks to that demand, the price of Bitcoin will surely go up. Of course, it is no secret to anyone the institutions are waiting for better macroeconomic conditions to jump into the water. In other words, a change in the monetary policy of the United States Federal Reserve will give us the green light.
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I fully understand that it is very difficult to accept that not everyone believes the same as one believes. In theory, it can be very sensible for us to choose a hard currency instead of one that is not in times of crisis. However, we cannot ignore the evidence. The strength of the dollar at the moment is telling us that, for now, most investors still view the dollar and its bond market as a safe haven. This could seem absurd to us with such high levels of inflation. But it is no use being right in theory and failing in practice. The dollar, at the moment, is being seen as the lesser of evils. Personally, I do prefer to lose 3%, 8% or 16% in a year than lose 30%, 60% or more during the same period. I mean, I’d rather lose less than more.
In social networks, the most popular analyzes are not always the best. Usually the most compelling headlines are the ones that appeal to a base’s emotions. And this is the method most used by influencers. Hatred of the common enemy unites more than good sense. Dogmas and simple phrases sell much more than doubt and reflection. Sectarian thinking is more popular than financial prudence. This is our world today.
What is the purpose of an opinion piece? We do not read to accept the author’s opinion. Nor do we read to refute or contradict what has been said. We read to reflect. The opinion of the other makes us think. It makes us question our assumptions and our prejudices. Doubt is always wiser than faith.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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