Robert Kiyosaki, who has authored the best-selling personal finance book “Rich Dad, Poor Dad,” sounded a stark warning regarding the equity market on Sunday.
What Happened: Kiyosaki is a backer of gold, silver, and Bitcoin BTC/USD and he has been drumming up the investment case for the precious metals and the apex crypto. In a new post on social media, the best-selling author recalled his previous warnings regarding the U.S. banking system.
Kiyosaki noted that before Lehman Brothers collapsed in 2008, he warned about it in a CNN interview, and in 2023 while appearing on Fox News, he predicted the demise of Swiss financial giant Credit Suisse as well.
“Laugh all you want into a global banking crisis,” he said.
The Japanese-American businessman said he had warned in his book “Rich Dad, Poor Dad” which was published in 1997 that “savers are losers” and “your home is not an asset.” This came true in 2008, he said. The 2008 Financial Crisis and the subsequent recession and stock market crash had their origin in the housing market, to be precise the subprime mortgage market. Riding on the housing boom, lenders extended mortgages to borrowers with questionable credit histories.
Financial institutions saddled with the derivate instruments based on these mortgage loans were left staring at huge losses. Bear Stearns and Lehman were casualties of this development.
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Stock Market Crash Imminent? Kiyosaki issued his next warning and this time it was regarding the stock market. “Watch for my next warning,” he said, adding “The S&P is next which will toast millions of 401ks and IRAs.”
The S&P 500 Index, which Kiyosaki referred to, is the broader U.S. marker gauge. His warning comes at a time, the equity market is rallying and is perched at the highest level of the year. After a lackadaisical year in 2022, when the Federal Reserve’s string of rate hikes stifled the economy, the stock market sprang back up as companies emerged stronger by resorting to efficiency measures.
So far this year, the S&P 500 Index has gained 19.92% and the index is now at its highest level (closing) since March 29, 2022. With the Federal Reserve turning less hawkish, the market has begun pricing in a rate cut sometime in the middle of 2024.
The stock market trajectory will largely depend on where the Fed funds rate is headed, which in turn will hinge on economic growth and inflation.
Most public funds invest in exchange-traded funds tracking the broader indices as a defensive strategy to insulate them from losses. A stock market collapse could make their investments worthless and deprive the public of the money they earmark for their retirement life.
The SPDR S&P 500 ETF Trust SPY, an ETF that tracks the performance of the S&P & 500 Index, ended Friday’s session up 0.43% at $460.20, according to Benzinga Pro data.
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