The Celebrity Investment Guru: Solid Advice Beneath Dangerous Showmanship
Robert Kiyosaki’s book “Rich Dad, Poor Dad” has sold double-digit millions of copies, and his other books and spinoff products (including a board game he’s very fond of promoting) haven’t done too badly either. Many swear by Kiyosaki’s lessons, attending his seminars and faithfully buying each new text. It’s hard not to be taken in by Kiyosaki’s friendly tone, listening to the story of the two father figures in his youth who gave him contrasting opinions on how to handle careers, finances and the other realities of life. (Never mind the potentially sketchy details of the story.) Read a few chapters more, and Kiyosaki lets you into his particular secret of wealth-building: flipping real estate.
It’s not that the real estate market is in itself unsafe, and indeed the skilled investor can find a profit in buying houses and buildings and using them as assets for future profit. But to start out in chapter one with simple truths that some people are afraid to let their money work for them, and a few chapters later get into vague discussions of quick turnarounds on selling houses, is quite the ramp-up. The notion of easily taken-in people approaching the real estate market with the same folksy you-can-do-anything-if-you-try attitude as the “rich dad” parable is a little frightening. Particularly as Kiyosaki eschews safer options such as savings accounts and the 401(k). Investments of any sort require a deep understanding of what you’re doing. Kiyosaki helps you through the philosophy, but not the research. Homework counts.
Yet pull aside what Kiyosaki says about real estate markets, fixing up houses, any of those specifics-it won’t take long, as the text is not long on specifics. And consider the lessons. He encourages people to put their money into assets that will generate wealth. He helps them realize that there is more to finances than simply taking home a paycheck and not overspending it. If a friendly “rich dad” story is what it takes, then so be it.
But maybe a kindly story is not for you; maybe you’re a rough-and-tumble kind of investor. Consider, then, Jim Cramer. Currently best-known for his CNBC program “Mad Money”, which plays like a college sports radio show with different nouns substituted for the football terms, Cramer presents an image of a man with attitude. Wacky sound effects, flashy graphics one step up in classiness from the 1960s “Batman” TV series and even call-in games are all part of the “Mad Money” style, that is, when the host isn’t throwing his chair someplace. Hardly dry stuff for a Harvard alumnus who worked at Goldman Sachs.
As one can imagine, “Mad Money” is a lot of fun to watch; how many investment shows have their own catchphrases and a ‘lightning round’? At the same time, though, an investor who gets too caught up in the action may miss the more serious side of investing. Cramer calls his show “Mad Money” for a reason-this is money put aside for speculation, not the whole pot. He does not recommend that his viewers put their bill-paying or retirement funds on the line on long-shot stocks. Furthermore, he is aware of his own potentially harmful effects, and dislikes an effect known as a “Cramer bounce”, where his nightly recommendations on purchases and sales directly show in the ensuing trading. But when a TV personality banging a gong recommends a stock, what are people supposed to believe?
It’s the subtitle of his book-“Sane Investing in an Insane World”-that seems to define the appeal of the investing world’s public figurehead. While men have their loud buddy Cramer, women turn to Suze Orman, author of a seemingly endless procession of personal finance books often geared toward her segment of the market, one recent example being “The Money Book for the Young, Fabulous and Broke”, which shepherds young people through the wilds of personal finances with cheerful, funky green and blue pages and tries to make them feel better about their choices-even when credit card debt is concerned. Like Cramer, she also has a CNBC show, complete with catchphrases. She is also a regular on, of all channels, QVC. Let’s see the stuffy guys at “The Wall Street Journal” try that.
It would be easy to look down our collective noses at these people and say that they were preying on the easily led flock of sheep. The right to do this, of course, depends on how much we ourselves have saved for retirement. The statistics are staggering; according to the 2006 Retirement Confidence Survey, nearly half of all Americans have little more than a guess of how much they need to save, and Washington DC research firm Mathew Greenwald & Associates determines that almost four in ten workers 55 and older have under $25,000 in savings. Drop the age restriction and more than half claim the same problem. Indeed, the Department of Commerce tells us gloomily, saving below 1% of our income is the norm.
With traditional company pension plans and Social Security dwindling away day by day, Americans need to get control of their own money and chart their financial future. Leaving it in a mattress won’t do it, nor even a savings account. Spending more than one makes certainly isn’t going to make it happen.
If a personality, be it through a book, a radio or a television set, can get Americans excited about investing, make it an enjoyable and interesting thing to learn about and get involved with, then by all means, let the fun begin. It’s never too late to get control of your money and put it to work for you, and whatever lights the fire under the nation’s collective posterior is worthy of praise. But we must not allow our excitement to turn into frenzy. Safe, responsible investing is the way to go-not pyramid schemes, not shady deals, not a hot stock tip.
Cut through the come-on tricks and the promises of major moolah, and we can find that beneath the showmanship of the celebrity investor is indeed a nugget of solid advice that any broker or banker or advisor can agree with: get motivated, get active, because the time to start investing is yesterday. If the stirring emotions of personal finance personalities can be combined with long-term planning, with charts and indices and mutual funds and other less flashy material, all will be well. Watching people make big bucks quickly can be thrilling, but seeing it grow slowly and securely into a prosperous future has its own rewards.
