Despite Bankruptcy Case, “Rich Dad, Poor Dad” Author Remains a RICH Dad

Popular author Robert Kiyosaki of “Rich Dad Poor Dad” fame seems under assault from mainstream media. While it has been true that Mr.Kiyosaki has indeed filed for bankruptcy, the guy has been insinuated as personally ‘bankrupt’.

[disclosure: I am no fan of Robert Kiyosaki. Mr. Kiyosaki was wrong about the real estate bubble in 2005. But has been right about the currency bubble and being bullish in precious metals. Nevertheless,  this terse commentary has been meant to put Mr. Kiyosaki’s case in perspective]

From ABS-CBN,

In an ironic twist, the author of the bestselling financial help book “Rich Dad Poor Dad,” Robert Kiyosaki, has filed for bankruptcy.

This after one of his companies lost a $24-million court judgment, according to a report from the New York Post.

“Kiyosaki’s Rich Global LLC filed for bankruptcy after being ordered to pay nearly $24 million to the Learning Annex and its founder and chairman, Bill Zanker,” the report said.

“US district judge Shira A. Scheindlin in April ordered Rich Global to pay up $23,687,957.21 after a jury ruled Kiyosaki must give the Learning Annex a percentage of his profits after using their platform for speaking engagements, including a 2002 gig at Madison Square Garden,” it added.

In reality, the reason behind Kiyosaki’s Rich Global LLC filing for bankruptcy has been about legal maneuvering

The same article quotes Mike Sullivan, chief executive officer of Kiyosaki’s Rich Dad Co as saying:

“Robert and [wife] Kim are not paying out of personal assets. We have a few million dollars in his company, but not 16 or 20. I can’t do anything about a $20-million judgment… We got hit for what we think is a completely outlandish figure.”

Mainstream media never explains this or at least gives an effort to make news objective or balanced.

Fundamentally, the case stems from charges of breach of contract by an aggrieved party whom was awarded in the court case.

From Business Insider,

But apparently the fame went to his head because according to court papers obtained by the Post, Kiyosaki, who published his first "Rich Dad" book in 1994, never paid the Annex its rightful share. Said founder and chairman Bill Zanker: "Oprah believed in him, and Will Smith believed in him, but he didn't keep his promise to us."

Yet Mr. Kiyosaki remains solvent in spite of the bankruptcy filing. Again from Business Insider:

Despite the blow to the personal finance guru's reputation, Kiyosaki probably won't feel the pinch in his wallet. Forbes pegs his net worth around a cool $80 million, and Kiyosaki, who's written 11 books, operates as many as ten other companies. Rich Global was said to be worth a few million when it went under.

Again, legal maneuvering from a bankruptcy procedure has been about the potential to discharge debts through the bankruptcy court.

According to bankrate.com, debts that are usually discharged from bankruptcy covers the following:

I think Mr. Kiyosaki’s decision to file for bankruptcy means that his case will fall under

Lawsuits and judgments: These result from creditors or collection agencies suing you for failing to pay. With few exceptions, you may eliminate the lawsuit even after it has begun or the judgment that results from the lawsuit.

So despite the bankruptcy proceedings and the implied media slur, Mr. Kiyosaki remains a RICH Dad!!! This serves as one neat example of why you shouldn't trust the mainstream media.

The Toxicity of Mainstream News

Chris Mayer at the Daily Reckoning explains why we should not rely on mainstream news as source for decision making (bold emphasis mine)

Dobelli’s analogy with food is a good one. We know if you eat too much junk food, it makes us fat and can cause us all kinds of health problems. Dobelli makes a good case that the mind works the same way. News is brightly colored candy for the mind.

News is systematically misleading, reporting on the highly visible and ignoring the subtle and deeper stories. It is made to grab our attention, not report on the world. And thus, it gives us a false sense of how the world works, masking the truer probabilities of events.

News is mostly irrelevant. Dobelli says to think about the roughly 10,000 news stories you’ve read or heard over the past year. How many helped you make a better decision about something affecting your life? This one hit home…

We get swamped with news, but it is harder to filter out what is relevant — which gets me to another point that hit home. Dobelli talks about the feeling of “missing something.” When traveling, I sometimes have this feeling. But as he says, if something really important happened, you’d hear about it from your friends, family, neighbors and/or co-workers. They also serve as your filter. They won’t tell you about the latest antics of Charlie Sheen because they know you won’t care.

Further, news is not important, but the threads that link stories and give understanding are. Dobelli makes the case that “reading news to understand the world is worse than not reading anything.” In markets, I find this is true. The mainstream press has little understanding of how markets work. They constantly report on trivia and make links where none exist for the sake of a story, or just for the sake of having something that “makes sense.”

In markets, reporters try to explain the market every day. “The market falls on Greek news” is an example. Better to not read anything if you’re going to take this kind of play-by-play seriously at all.

The fact is we don’t know why lots of things happen. We can’t know for sure why, exactly, things unfolded just as they did when they did. As Dobelli writes, “We don’t know why the stock market moves as it moves. Too many factors go into such shifts. Any journalist who writes, ‘The market moved because of X’... is an idiot.”

You contaminate your thinking if you accept the neat packages news provides for why things happen. And Dobelli has all kinds of good stuff about how consuming news makes you a shallow thinker and actually alters the structure of your brain — for the worse.

News is also costly. As Dobelli points out, even checking the news for 15 minutes three times a day adds up to more than five hours a week. For what? He uses the example of the Mumbai terror attacks in 2008. If a billion people spent one hour of their attention on the tragedy by either reading about it in the news or watching it, you’re talking about 1 billion hours. That’s more than 100,000 years. Using the global life expectancy of 66 years means the news consumed nearly 2,000 lives!

Pretty wild, right?

So what to do? Dobelli recommends swearing off newspapers, TV news and websites that provide news. Delete the news apps from your iPhone. No news feeds to your inbox. Instead, read long-form journalism and books. Dobelli likes magazines like Science and The New Yorker, for instance.

News and analysis from the mainstream usually represents oversimplified narration of facts that has been typically grounded from cognitive biases (heuristics) and logical fallacies.

Also because news outfits are profit based businesses, their presentations are often designed to generate or to solicit public’s attention through sensationalist reporting or through supposed “analytical” discussions mostly predicated on the emotive dimensions.

Moreover because news outfits have enormous influence on voters, they have embedded ties with the establishment as they reciprocate each other in projecting "noble"political goals. Thus media's bias has been to promote the establishment's interests and frequently serve as discreet channels for political propaganda.

Noticeably most of their arguments have been focused on personality issues rather than the objective evaluation of the system.

Yet their basic recourse to any social problem would be to: 1) change the leader, 2) throw money at the problem, 3) prohibit or intervene on any supposed social ills or 4) tax particular groups. No one ever sees how their proposed interventionism creates more problems which they intend to resolve.

Except for the facts I usually refrain from reading or listening to any of their stupefying analysis.

And I firmly agree with Mr. Dobelli who is quoted above saying “reading news to understand the world is worse than not reading anything”. I’d rather be dumb than be indoctrinated with a quack view of the world.

Mainstream Media’s Increasing Attention To The Gold Standard

Below is an interesting perspective on gold from the Economist,

THE creditworthiness of a country used to be judged by the level of its gold reserves. Under the gold standard, a fall in reserves would lead to the central bank taking crisis measures. The country with the biggest reserves in the world is, not surprisingly, America, with 8,134 tonnes. But expressed in terms of reserves per person, the picture looks very different. It is no surprise to see Switzerland at the top of the list, but why is Lebanon in second place? Its reserves were purchased when the country was the Middle East’s financial centre in the 1960s and 1970s and safeguarded through the civil war years by legal restrictions and by central-bank governor Edmond Naim, who according to legend slept in the bank to protect the hoard. China does not feature in the list at all; but gold bugs fantasise about what might happen if the people’s republic were to swap just some of its mountain of Treasury bonds for bullion.

What’s interesting is that with gold prices over $1,500, there has been increasing instances of mainstream media’s reference to the gold standard.

Google Trends reveal of the upward trend in searches made on the “gold standard” (green trend line above window).

And at the bottom pane, in 2010-2011 (red circle) news reference volume has significantly improved compared with 2004-2007 and in 2008-2009.

Signs of things to come? Hmmmmm

The Deepening Of The Information Age: News Sources And Ad Spending

If educational trends appear to be turning digital, the same dynamic seems to take hold with the way people use media.

A poll says that in the US, while news acquisition by the public has been mainly through TV, the internet, as major competitor, has rapidly been catching up.

According to Pew Research (chart also from them)

The internet is slowly closing in on television as Americans' main source of national and international news. Currently, 41% say they get most of their news about national and international news from the internet, which is little changed over the past two years but up 17 points since 2007. Television remains the most widely used source for national and international news -- 66% of Americans say it is their main source of news -- but that is down from 74% three years ago and 82% as recently as 2002.

The study further notes that the less educated has remained as the last bastion or the key consumer of TV.

In other words, the less educated will likely be the last segment to adapt to the deepening use of technology.

And such transition appears to be corroborated by corporate ad spending on a global scale, where online spending has been fast closing on the gap with TV.

According to the Economist,

GLOBAL spending on advertising will grow by 4.5% in 2011, double the rate of the previous year, according to ZenithOptimedia, an ad agency. This will be led by online advertising which will increase by 16%. Television advertising will also grow, led by emerging markets, where it is an especially dominant medium. But spending on print advertising will fall by around 1%. Extending print-media brands online offers some hope of reversing the downturn, but digital ad revenue will not replace that lost by print in the foreseeable future, according to the World Association of Newspapers.

Changes have been happening at the margin.

These suggest of the broadening use of digital web based technology for a substantial share of our social activities.

Traditional mass based lifestyle tailored to the industrial era have been paving way to the information age characterized by social connectivity predicated on competition, diffusion, diversity, and specialization; an environment which can be identified with the great Austrian economist F. A. Hayek. Even TV programming trends appear as exhibiting similar symptoms (chart above from the same Pew study).

Overall, this means that lifestyle and commerce will increasingly evolve towards niches—or based on shared interests or specific ethos, that will be marked by more competition.

The implication is that statistics based on aggregates will likely become more irrelevant. In addition, investments will likely center on these growth “niche” areas. (yes, that’s an investment tip alright)