Stock Market Goes On Sale
Say what you want about Robert Kiyosaki, the author of Rich Dad, Poor Dad, but he's a smart man. I couldn't help but laugh when I read this line from an interview with The Street.com.
"I haven't been this bullish in years," says Kiyosaki. "What a buying opportunity. ... The stock market goes on sale, and everybody runs away."
But, he's excited probably only for a short time.
"When the market comes back, I go back to sleep," he says.
I too share his sentiment but I managed to pull money out near the top and buy near the market lows (I hope). As of yesterday, I started my program of rotating my cash and bond holdings back into the market and plan to be 95% in stocks by December 2008.
Update in 2020
I decided to republish this short blog post from my archives because it makes a lot of sense right now. Buying things on sale is NOT a new idea. Everyone knows this when it applies to TVs or toilet paper but hardly anyone does this when it comes to the stock market selling off into a bear market. I completely understand the fear that comes with doing this, no one wants to catch a falling knife, but at some point, the market will bottom out.
You'll never know when it'll bottom out but you have to make a best guess and scale your positions in if you can.
When I made this blog post back in June 2008, linking The Street interview with Kiyosaki, the S&P500 was trading at the 1350 level. The real selloff and crash didn't happen till September 2008 and didn't end till mid-November 2008 when it closed at the 790 level.
I don't remember when I started rotating money out of the market but it was before the crash. I remember seeing how the Real Estate market was teetering and the banks started collapsing. While I consider that lucky on my part, the best decision I made in my investing life was buying near the lows.
Let's face it, I didn't 'nail' the bottom and it's pure luck if you do, but if great companies like AAPL or MSFT sell off 20, 30, or 40% because of general market fear, then it's probably a good idea to buy some.
Where's Robert Kiyosaki now? He's still writing books and running his financial education company. There have been some people who say he's a con artist and I tend to believe he's a 'fake it till you make it' guy. If you go on YouTube he's back to hoarding gold and silver and sticking with real estate. At least he's consistent but like with every financial 'guru' out there, you have to do your homework and DON'T follow them blindly.
The best thing you can do for your financial future is to educate yourself. The markets are rigged in the short term but they win in the long term, which is why I passively invest now. You can trade trends, those are very profitable if you can find an emerging market sector, find the leaders, and ride them for some time, but passive investing is King in my book.
If you're interested in reading more on this topic, check out my investing tag.
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