Ready to know the Lesson 5: What Are the Rules?
Robert discusses the importance of rules and laws and how they impact people, particularly in war. He explains that many individuals get into trouble because they either don’t know, ignore, or break the rules.
He shares his experience with rules in Vietnam, which he found frustrating:
• He never liked strict rules, especially during the Vietnam War.
• He found it unfair that his side had to follow strict rules while the enemy did not.
• A particularly frustrating rule was that soldiers couldn’t chase enemies across borders, even when the enemy used those borders to escape.
• Another issue was that U.S. soldiers had to wear uniforms, while the enemy did not, making it difficult to identify threats.
Do Rules Really Increase Asset Value?
Robert explains the role of rules in different areas of life, particularly in money and investing. His rich dad taught him that rules create order and protect value—whether in neighborhoods, sports, or f inancial markets.
In investing, different assets follow different rules. Robert prefers real estate because its rules provide him with more control and tax benefits, unlike mutual funds, which offer fewer advantages.
He also highlights how breaking financial rules—as seen in the Enron scandal—can lead to disastrous consequences.
To succeed financially, it’s essential to understand the rules and work with experienced accountants and lawyers who can navigate complex regulations.
As a final view, Robert says that knowing and following the right financial rules can help build wealth, while ignoring or breaking them can lead to losses.
Lesson 6:
Trends! Robert shares a personal experience from the Vietnam War era, where he observed how people reacted to economic instability. South Vietnamese citizens, fearing the fall of their country, rushed to exchange their local currency for gold.
Through this, he realized:
• Gold holds its value globally, even in times of crisis, making it a safe haven compared to unstable currencies.
• Thinking he could profit from this trend, he and a friend risked their lives to buy gold at a discount in a war zone.
• However, instead of finding desperate sellers, they met a financially savvy local woman who refused to sell for less than the global price.
This experience taught Robert that gold’s value is universal and that market trends are shaped by deeper economic and geopolitical forces. He also learned that real-world economics goes beyond numbers and theories—sometimes, the most valuable lessons come from unexpected places.
Is the Trend Your Friend?
Robert discusses the importance of trends, information, and intelligence in investing. He shares three key lessons:
1. Understanding Global vs. Local Markets
◦ Some assets, like gold, are priced the same worldwide.
◦ Others, like real estate, depend on local factors, meaning a small investor with local knowledge can outsmart big institutions.
2. Following Market Trends
◦ Instead of taking unnecessary risks or searching for discounts, simply investing with the trend can be profitable.
◦ Robert regrets not recognizing the rising gold trend earlier, as he could have made money without taking risks.
3. Turning Information into Intelligence
◦ Having data isn’t enough—knowing how to use it is key.
◦ The old woman in his story had the same information as Robert but used her experience to make better decisions.
Robert applies these lessons during the 2007 market crash. Instead of panicking, he focused on trends, observing that central banks were printing more money, which confirmed his belief that the dollar’s value would decline.
As a final thought, Robert says: Focus on a few key assets, study trends, and stay flexible in the ever-changing Information Age.
Robert then introduces some of the key trends he’s investing in today—get ready to learn about them!
