Insanity of Mr. Market – Robert Kiyosaki

By Robert Kiyosaki

I’ve never cared for the stock market. To me, investing in stocks is like taking a trip to Las Vegas. I know Las Vegas is fun, exciting, and a few people do win money. However, the odds are stacked against you. Las Vegas is for gamblers and is funded by losers—and so is the stock market.

I’m not saying, “Don’t invest in the stock market.” All I’m saying is, “Don’t be a gambler.” Many people make a lot of money in Las Vegas and the stock market, but they’re not gamblers—they’re pros.

Mr. Market
Benjamin Graham is Warren Buffet’s guru. In his book, The Intelligent Investor, Graham created a parable around a character known as Mr. Market, your manic-depressive investing partner. Mr. Market is always buying and selling your business. When he’s depressed, he sells your business for nothing. When he’s happy, he buys your business back for ridiculous prices.

The moral of the story? Mr. Market is not sane; and sane people don’t determine share prices.

Buy real estate
Yesterday, I read a newsletter by stock market advisors in order to follow the insanity of Mr. Market.

What caught my eye was their recommendation that people start buying real estate. Their logic is that real estate prices have bottomed and interest rates are at all time lows.

This is the insanity of people who invest in the stock market. These idiots actually believe investing in real estate is the same as investing in the stock market. Those of you who invest in real estate know what I’m talking about.

Some of the reasons why real estate is different than investing in stocks are:

  1. Real estate isn’t liquid. You can’t buy and sell in an instant as you can with stocks.
  2. Real estate involves debt. If you make a mistake choosing your real estate, it’s not the real estate that kills you—it’s the debt.
  3. Real estate is management intensive. In theory, stocks have professional management. In real estate, you’re often the property manager. If you’re a bad manager, you can lose everything. A bad manager can destroy your property. On top of that, your tenant can sue you if you’re a bad manager. In other words, you wind up paying them to live in your property.

Why I love real estate
I love real estate for all the reasons that most people who like stocks wouldn’t.

Why? Because most stock investors aren’t entrepreneurs. Most stock investors are employees and should stay in the stock market.

If you’re a great businessperson, real estate is a great business. Why else would bankers loan people like me millions of dollars to buy my investments? Most bankers won’t lend you millions of dollars to buy stocks.

Why does the IRS give me massive tax breaks for investing in real estate, often paying zero in taxes after making millions of dollars? The reason is because real estate is a business that produces jobs and stimulates the economy. The tax department doesn’t offer such generous tax breaks for stock investors.

Through real estate, I can create an asset that puts liquid cash flow into my pocket each month, use Other People’s Money (OPM) to buy that asset and achieve infinite returns, and have complete control over my asset. I want to own my asset, not trade my asset. I want peace of mind, rather than worry every time Mr. Market goes insane.

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