The Power Of Association | Rich Dad Poor Dad

Choose friends carefully the power of association

First of all, I do not choose my friends by their financial statements.

I have friends who have actually taken a vow of poverty as well as friends who earn millions every year. The point is that I learn from all of them.

Now, I will admit that there are people I have actually sought out

because they had money. But I was not after their money; I was

seeking their knowledge. In some cases, these people who had money have become dear friends.

 I’ve noticed that my friends with money talk about money. They don’t do it to brag. They’re interested in the subject. So, I learn from them, and they learn from me.

My friends who are in dire financial straits do not like talking about money, business, or investing. They often think it rude or unintellectual.

So, I also learn from my friends who struggle financially. I find out what not to do. I have several friends who have generated over a billion dollars in their short lifetimes.

The three of them report the same phenomenon:

Their friends who have no money have never come to them to ask

them how they did it. But they do come asking for one of two things,

or both: a loan, or a job.

WARNING:

 

Don’t listen to poor or frightened people. I have such friends, and

while I love them dearly, they are the Chicken Littles of life. To them, when it comes to money, especially investments, it’s always,

“The sky is falling! The sky is falling!”

They can always tell you why something won’t work. The problem

is that people listen to them. But people who blindly accept doom-and-gloom information are also Chicken Littles. As that old saying goes,

 

“Birds of a feather flock together.”

If you watch business channels on TV, they often have a panel

of so-called experts. One expert will say the market is going to crash,

and the other will say it’s going to boom. If you’re smart, you listen

to both. Keep your mind open, because both have valid points.

Unfortunately, most poor people listen to Chicken Little.

I have had many close friends try to talk me out of a deal or an

investment. Not long ago, a friend told me he was excited because he

found a 6 percent certificate of deposit.

 

I told him I earn 16 percent from the state government.

The next day he sent me an article about

why my investment was dangerous. I have received 16 percent for

years now, and he still receives 6 percent.

I would say that one of the hardest things about wealth-building is

to be true to yourself and to be willing to not go along with the crowd.

This is because, in the market, it is usually the crowd that shows up

late that is slaughtered. If a great deal is on the front page, it’s too late

in most instances. Look for a new deal. As we used to say as surfers:

 

“There is always another wave.”

 

People who hurry and catch a wave late usually are the ones who wipe out. Smart investors don’t time the markets. If they miss a wave, they search for the next one and get themselves in position. This is hard for most investors because buying what is not popular is frightening.

Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on. Wise investors buy an investment when it’s not popular.

 They know their profits are made when they buy, not when

they sell. They wait patiently. As I said, they do not time the market.

Just like a surfer, they get in position for the next big swell.

It’s all “insider trading.” There are forms of insider trading that are

illegal, and there are forms of insider trading that are legal. But either way, it’s insider trading. The only distinction is: How far away from the inside are you? The reason you want to have rich friends is

because,

that is where the money is made. It’s made on information. You want

to hear about the next boom, get in, and get out before the next bust.

I’m not saying do it illegally, but the sooner you know, the better your chances are for the profits with minimal risk. That is what friends are for.

And that is financial intelligence.