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A Prophet's Hope Is to Be Wrong
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Rich dad often said, “I hope I'm wrong.”

He believed that by giving his son and me enough of a warning, we would have the time to prepare just in case he was right. He said, “The ques tion is not whether I am right or wrong. The question is, Are you prepared just in case I am right?”

The good news was that rich dad's prophecy motivated me to prepare rather than remain complacent. In preparation, Kim and I built our ark. Building our ark led to increased financial education, experience, and financial freedom. So even if the great flood never comes and rich dad was wrong, our preparation has led us to a more financially secure position in life.

A giant stock market crash is coming . . . but the market crash is not the problem. Predicting a market crash is not a big deal. All financial markets go up and all financial markets go down. Market cycles are a part of life. Predicting a market crash is like predicting the coming of winter. The issue is the problems the next market crash will reveal. The next crash will be especially hard because three generations have pushed a bigger problem forward . . . the problem of how a person supports himor herself once their working days are over. That is an unprecedented problem that grows bigger every day.

Warren Buffett says, “It's only when the tide goes out that you learn who's been swimming naked.”

The next market crash will reveal who has been swimming naked, and one of those groups could be the government itself. For too long now, the govern ment has made promises it knows it cannot keep. But broken promises are not really the problem. The real problem is a society that is naive enough to ac tually believe the promises. Too many people believe the government is re sponsible for saving them from their own inadequacies. Many people believe the government is like their fairy godmother, a mythical person who can wave a magic wand and all their financial problems will disappear. A society that be lieves in fairy tales is not a mature society.

In the real world of business and investing, the fairy godmother is the Federal Reserve Board and her older sister is the government. In financial terms, they are called the lenders of last resort. Right after September 11, 2001, the Federal Reserve flooded the economy with money as any grandparent would, hoping to ease the pain of their grandkids. When airlines got in trouble after the attack, the federal government stepped forward as the lender of last resort to save some of these airlines. This was like the kindly old grandpa stepping forward to rescue one of his adult children who also happens to have kids. My question and concern is whether the federal and state governments can afford to be the lender of last resort for much longer.

Like it or not, within a few years millions of baby boomers in America will start turning seventy years old. The question is, How many of them will have enough to afford to live for the rest of their lives? How many will look to the state and federal governments to be the fairy godparents?

The message of this book is that sometime soon people will begin to re alize that neither the government nor the stock market can save them.

The Bad News

The bad news is that the next stock market crash will reveal a level of poverty in America that will shock the world. The world will ask how the richest country of all time can suddenly have so many poor people.

Even worse, economic anger and frustration are on the rise worldwide, which means we will need to solve these problems both globally as well as nationally.

As Warren Buffett says, “In the event of nuclear war, disregard this message.”

The Good News

The good news is that when times are bad, people are often at their best. Right after the September 11 attack, millions of people found it in their hearts to do something positive and find the hero within themselves. I be lieve that the coming financial disaster will also bring out the best in people. Rather than complacency, despair, and depression, I believe people will rise up and work to solve this “problem of poverty” in a rich land. The even bet ter news is that through the power of electronic communications, we can also work to end poverty throughout the world.

Earlier in this book, I wrote that there were three types of education. They are:

1. Academic

2. Professional

3. Financial

In America today, I would grade our ability to teach the basics of reading and writing as a C. I would rate our ability to train people professionally an

A. America has great professional schools. But when it comes to financial education, I would give the American school system an F. This deficiency needs to be corrected immediately, if we are to continue as a world power.

In the Industrial Age, all a person needed was academic and professional education. In the Information Age, those two levels of education are no longer enough. In the Information Age, a person needs to be financially competent as well as academically and professionally competent. A high paying job is not enough. We need to know how to survive when our working days are over and that will require financial education on a large scale.

Two Professions

In the Industrial Age, all we needed was a good job or profession. In the Information Age, we will need two professions. One profession is how we make our money and the second profession is how we invest our money. In order to have the second profession, financial literacy is mandatory.

It's Your Choice

Noah could see the future and he prepared for it. If you see a future similar to the one rich dad did, you too may want to prepare while there is time to prepare. Hopefully, of course, the giant stock market crash will not come. Maybe someone will wave a magic wand and we will live happily ever after. But I do not think a stock market crash can be averted. Nor do I think that millions of baby boomers will suddenly save enough money to care for themselves for as long as they live. I think we will face an emergency, and out of this crisis, a new financial world will emerge. Of that I am confident, and I look forward to it. The coming stock market crash will reveal problems that we, as a society, have been pushing under the rug for too long. The good news is that once these problems are exposed and the truths are told, we have a chance of solving them once and for all . . . not just for ourselves, but also for the world.

Beyond the Bulls and the Bears

With the promotion of the 401(k) plans, the U.S. government, and by similar means other governments throughout the world, required millions of people to invest without first requiring them to become investors. As noninvestors entered the market, most were simply told that on average the stock market goes up. With that assumption, the boom in mutual funds was on.

The truth is that real-world investors know that all markets—regardless of whether they are stocks, bonds, real estate, heating oil, pork bellies, crude oil, mutual funds, or interest rates—move up, down, and sideways. A realworld investor would not invest in an asset that only did well in one direction or in a program that did not allow you to exit when prudent to. But that is just what the 401(k) did. It pushed people into assets that they had no control over, only did well in one market, and they could not exit without some sort of penalty. That is like handcuffing a swimmer and throwing him into the deep end of the pool.

Due to their lack of education, most DC pension plan investors have had to buy into the optimistic, Pollyanna point of view, the point of view of an eternal bull market. Real-world investors know that each market is made up of both bulls and bears. For those of you who want to take greater control over your financial destiny, you may want to go beyond just being a bull or a bear. If you want to be a real-world investor, you may want to develop your financial education, experience, and instincts in order to become a person who can see beyond the ups and downs of any market and always see the brighter future that lies ahead.

Noah knew that he had to take action because a catastrophe was about to take place. Being a man of vision, he could see beyond the darkness and see a brand-new world at the end of the flood. Although he knew he could not save everyone, he knew he could bring life to the new world. In other words, he took action not only because of the impending disaster but he also took action for a brighter future he knew lay ahead.

Being a real-world investor means being in tune with the real world. Optimists love the idea of buying, holding, diversifying, and praying. But if you plan on taking control of your future, you need to have real-world skills to see the better world beyond the storm clouds. If you become a real-world investor, you will not care if markets go up or markets go down because you will do well in all markets. You will not get caught in the debate of who is in control, the bulls or the bears . . . a debate that most short-term investors get caught up in, buying or selling with every turn of the market. If you become a real-world investor you will simply see the ups and downs of markets as one of the games of life.

Obviously, we are living in very chaotic times. Obviously, we as a global society have many challenges ahead. One of the challenges is the growing poverty not only in the third world but also in first-world countries such as America. The gap between the haves and have-nots must be narrowed. The reason this book has been dedicated to a teacher, Dave Stephens, and visionary teachers like him is because teachers hold the key to the future. Teachers hold the key because they are the people that prepare our children for the future. My poor dad, also a teacher, often worried that schools focused too much on ancient history rather than the future. He would say, “If I could see the future, I would know what to teach our kids.” So that is why this book is dedicated to teachers like Dave Stephens and teachers who have the courage to offer their students the educational skills required for the future. If we have more teachers and more students teaching these financial skills, my Rich Dad's prophecy can be proven wrong. And that is the job of a prophet . . . a prophet's job is to provide enough of a warning so that his prophecy will be wrong and the actions taken will lead to a better world for us all.

This book is not meant to be a doom and gloom book. This book is written to inspire you to gain the skills you need to see the bigger and brighter picture of life . . . life beyond the storm clouds that are brewing. The future will be very bright for those who are prepared. But being prepared also means having faith as Noah did, the faith to see a better world beyond the storm.

Rich dad often used the saying “The darkest hour is the hour just before dawn.” That was his way of reminding us to continue to improve our skills, to keep our faith strong, especially in the darkest of hours, and have the courage to step forward while others are running backward.

You have the opportunity to take control of your financial life. By build ing your own ark full of assets that work for you, you can prepare yourself to prosper no matter how the stock market performs.

In closing, I leave you with this quotation from Warren Buffett, America's richest and most successful investor, who says that he likes to buy stocks when “the bears are giving them away.”

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