Bad news is good news?Â This got me puzzled.Â Is Robert Kiyosaki out of his mind?Â Or is he a sadist?
Robert Kiyosaki explains:
The Quadrant I want to focus on for this article is the Investor Quadrant. Why focus on the I Quadrant? The reasons are because, today, most of us need to be investors and because the person who is successful in the I Quadrant is often very different from the people in other Quadrants.
Why is the person in the I Quadrant different? Because the true I is a person who looks for bad news, not good news. A true I, a person like Warren Buffet, is most excited when times are at their worst. When times are good, they move on – looking for bad news in other sectors, searching for bargains, investments with high value low prices, and a trend that is about to take an upward turn.
Why is knowing about this core difference so important? There are several reasons. They are:
Reason #1: Most people live in fear of bad economic news, which makes them bad investors. This fear of something bad happening is what causes many people to cling to job security, a bad relationship, a bad investment, or an unfulfilled (often boring) life.
Reason #2: When times are bad you have the best opportunity to get rich. Just before the war in Iraq started, the stock market was low and the real estate market was, and continues to be, in a mania bubble. In the last two years, it seems that everyone I met was suddenly in the real estate market. People who had never bought an investment property were suddenly flipping properties for quick cash. Financial planners, who were once selling mutual funds during the stock market boom, were suddenly transformed into mortgage brokers or real estate brokers, selling the gospel of real estate to the newly enlightened.
In 2002, when the stock market was down, Kim and I invested heavily in the stock market. While we continued to invest in real estate during this period, more or our investment dollars went into paper assets. Why? Because the stock market was nothing but bad news and real estate was the good news.
So reason #2 is that people who fear bad news, waiting only for good news, often arrive late to the wrong party and pay the cover charge.
Reason #3: Your life is more exciting. Rather than living in fear of bad economic news you look forward to the next economic catastrophe. To me, this is the best reason of all.
As stated in reason #1, most people live in fear of bad economic news. If you are truly from the I Quadrant, this fear – a fear that runs most people’s lives – is turned from fear into excitement. If you can learn to live with excitement rather than fear, my experience is that life is more fun, stimulating, and fulfilling. The more I hear about bad news, the happier I get. To me, being happy and getting richer in good times and bad is a great way to live life.
Reflecting back, this does have its truth.Â I have often heard this phrase when playing in the stock market – “Buy low, sell high”.Â When bad newsÂ surfaced, the stock market usuallyÂ reacted emotionally and went south.Â The bargain hunters willÂ be on the looseÂ toÂ pick upÂ great bargainÂ buys, and wait for the rebound in the market to sell off for a tidy sum ofÂ profit.Â Bad news is good news for these bargain hunters.