April 22, 2024
Stock Market

Robert Kiyosaki’s Track Record on Predicting Stock Market Crashes | Investing


Robert Kiyosaki is a popular figure in the world of personal finance. Kiyosaki is the author of “Rich Dad Poor Dad,” a book he self-published back in 1997 that went on to spend more than six years on the New York Times bestseller list. In the book, Kiyosaki argues that it’s extremely difficult to build wealth from a paycheck, and the best way to become rich is by owning real estate and other assets that generate passive income.

Some of Kiyosaki’s practical personal finance advice is sound, if not particularly original. For example, he argues that building wealth is more about how much money you spend than how much money you earn.

Kiyosaki is a self-proclaimed finance guru, but his financial track record prior to “Rich Dad Poor Dad” isn’t particularly impressive. The Hawaii native has a Bachelor of Science degree from the United States Merchant Marine Academy but failed to complete an MBA program at the University of Hawaii at Hilo. Several companies he founded have gone bankrupt, and Kiyosaki was reportedly living out of his car during the worst of his financial struggles.

Beyond his questionable resume, some critics have also blasted Kiyosaki for dangerous and illegal advice he has given during speaking appearances, including advocating for insider stock trading, recommending investors buy stocks on margin in unfunded brokerage accounts and advising people to buy multiple real estate properties with little or no money down.

Over the years, Kiyosaki has not been shy on weighing in on the stock market, typically making doom and gloom predictions about the economy and advising followers to sell stocks and buy assets like gold and real estate. While some of Kiyosaki’s basic personal finance philosophy is solid, any followers who took his advice and avoided the stock market for the past couple of decades have missed out on tremendous wealth-building opportunities.

Here’s a look back at several stock market recommendations the author has made over the years and how well his predictions played out in the market.

Robert Kiyosaki’s Stock Market Predictions

April 7, 2011 (tweet): “For the educated, an economic crash is the best time to get rich. Guess what? The crashing is not over.”

Kiyosaki was presumably talking about the 2008 stock market crash at the time of this prediction. While the S&P 500 did drop from a 2011 high of around 1,370 to a low of around 1,074, it came nowhere close to its 2009 lows of around 666. In the year following his April 7 tweet, the S&P 500 generated a total positive return of 3.7%.

Sept. 1, 2015 (tweet): “I’ve been predicting since ’02 that we would see a stock market crash in ’16.”

Kiyosaki’s followers might argue that the early 2016 market volatility that dropped the S&P 500 from around 2,050 to as low as 1,810 is the “crash” he was predicting, but a less than 15% pullback from recent highs is a fairly typical example of a healthy market correction. And by the end of 2016, the S&P 500 had generated a 9.5% gain on the year.

July 30, 2017 (tweet): “Another sign a real estate crash is coming…..”

This time, Kiyosaki’s prediction of a repeat of the 2008 housing market collapse completely missed the mark. The tweet, which retweeted a zerohedge tweet from the day before that read “Southern California Median Home Price Doubles In Five Years”, could not have been more wrong. In the 12 months following this prediction, the Real Estate Select Sector SPDR Fund (ticker: XLRE) gained 4.9%, the national Case-Shiller Home Price Index gained 5.7% and the S&P 500 climbed 14%.

In fact, despite the rapid run-up in SoCal home prices at the time of the tweet, prices in the region would never go lower than they were at the time of Kiyosaki’s tweet. A St. Louis Federal Reserve index measuring housing prices in the Los Angeles – Long Beach – Glendale area sat at 329.29 in the second quarter of 2017, a level it’s exceeded in every quarter since. The index last clocked in at 521.66 in the fourth quarter of 2023.

Aug. 7, 2018 (article): “Unfortunately we had a big crash in 2000, they called it the dotcom crash, then in 2008 it was the subprime real estate crash. The next is going to be the biggest of all. When it’s coming I don’t really know, but the foreshocks are sounding right now.”

In this article, which was published in August 2018 and updated four months later, Kiyosaki specifically recommended investors buy gold. It turns out gold has been a fairly good investment in recent years, but investors who followed this advice at the time didn’t gain very much. Since the article was published in 2018, SPDR Gold Shares (GLD) is up 84%, and the S&P 500 is up 82%.

The biggest crash of all that Kiyosaki predicted has yet to occur.

April 17, 2020 (tweet): “CRASH ONLY BEGINNING: Buffet says ‘When tide goes out you see who’s been swimming NAKED.’ Billions of naked swimmers. SAD.”

This time, Kiyosaki warned investors that the stock market crash tied to the COVID-19 pandemic was only beginning. The only problem was he posted this warning on Twitter just after the S&P 500 reached its 2020 lows. In the year following this warning, the S&P 500 gained a staggering 53.4%.

The tweet also misspells the last name of Warren Buffett, the Berkshire Hathaway Inc. (BRK.A, BRK.B) CEO who is widely considered the greatest investor of all time.

Oct. 28, 2020 (tweet): “The EVERYTHING CRASH is coming. Since 1987 world has been in EVERYTHING BUBBLE. Now all crashing. Prices of gold silver Bitcoin will crash too. US dollar to rise. Be patient.”

This time, Kiyosaki was very specific with his recommendations: Buy gold, silver, U.S. dollar. Kiyosaki’s predictions were a complete dud. In the 12 months following these recommendations, the GLD ETF declined 4.6%. The Invesco DB US Dollar Index Bullish Fund (UUP) was down 0.7%, the iShares Silver Trust (SLV) was up 2.2%, the S&P 500 was up 40.5% and the price of Bitcoin skyrocketed 356.8%.

Sept. 26, 2021 (tweet): “Giant stock market crash coming October. Why? Treasury and Fed short of T-bills. Gold, silver, Bitcoin may crash too.”

Almost a year after his previous economic doomsday prediction, Kiyosaki went back to the well with nearly identical recommendations. This time, his recommendations worked out a bit better for his followers … but the economic collapse never materialized. In the 12 months following this message, the S&P 500 dropped 17.7%, the GLD fund dropped 7.6%, the SLV fund dropped 19.2% and Bitcoin prices tumbled 55.5%.

That said, Kiyosaki makes a specific claim here (an October 2021 crash) that did not materialize. It’s another objectively incorrect prediction.

Sept. 26, 2022 (tweet): “EVERYTHING BUBBLE into EVERYTHING CRASH. I warned in my books, the biggest crash has been building since 1990s. Rather than fix problems FED printed FAKE $. In Everything Crash everything crashes even gold, silver, BC.”

In the 2022 edition of his annual fall doom and gloom proclamation, Kiyosaki played his greatest hits. One year later, the S&P 500 was up 16.9%, the GLD fund was up 16.6%, the SLV fund was up 23.9% and Bitcoin was up 36.4%.

Kiyosaki’s assertion that an “everything crash” was coming ended up being a great buy signal, as markets would soon begin a roaring year-plus rally that continues to this day.

July 17, 2023 (tweet): “I do not play the stock or bond markets. As an entrepreneur I like my hands on control too much. Yet too many signs point to a severe stock market crash.”

In Kiyosaki’s defense, many economists were calling for a recession throughout 2023. However, that recession never materialized and the S&P 500 has instead surged to new all-time highs. Specifically, the S&P 500 is up 15.1% since this warning.

Dec. 10, 2023 (tweet): “Get some cash out of banks as you need cash. This may be the start of the biggest crash in history.”

It’s only been a few months since Kiyosaki made his latest economic collapse prediction, but he’s off to a rough start with this one. The S&P 500 is up 12.6% since this warning.

Takeaway

For some people, Robert Kiyosaki’s bestselling book “Rich Dad Poor Dad” has been an excellent resource for learning about the basics of personal finance, including topics like budgeting, saving and investing. However, Kiyosaki seems to have found an audience more as a stock market and economic permabear than a personal finance expert in recent years.

Timing bull and bear markets is extremely difficult even for professional traders, but the S&P 500 has proven to be extremely resilient over the decades for investors who buy and hold index funds for the long term. Kiyosaki has repeatedly warned investors about a catastrophic stock market crash for at least 13 years now. Yet since his initial warning in April 2011, the S&P 500 has generated an overall total return of 290%.

Given his atrocious track record, Kiyosaki’s morbid predictions on financial assets and the economy should not be taken seriously, and certainly shouldn’t cause you to make changes to your portfolio. The investor who bought a low-cost stock market index every time the author predicted a crash has built a dramatically better financial life than the investor who sold in fear each time Kiyosaki cried “wolf.”





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