Are you a pro or a schmo when it comes to trading. Take a look at these, “Stages Of A Financial Cycle” as described by Robert Kiyosaki, “Rich Dad, Poor Dad”.
Robert Kiyosaki Robert Kiyosaki, who penned the best-seller “Rich Dad, Poor Dad” two decades ago, has apparently made a fortune — reported to be around $80 million — writing, came up with these 7 stages of a financial cycle.
Here they are:
Stage 1: A Financial Shock Wave. Something kick-starts the emerging crisis by shaking up the status quo — a war, low interest rates, or new technology.
Stage 2: Acceleration. In order for the shock to turn into a boom, fuel is required. Kiyosake used the historic real estate boom following 9/11 as an example. He said there was a buying panic fueled by a crashing stock market and falling rates.
Stage 3: Euphoria. It’s at this point when the greater fools rush in. “We have all missed booms,” Kiyosaki explained. “A wise investor knows to wait for the next boom, rather than jump in if they’ve missed the current one.”
Stage 4: Financial Distress. This is when those greater fools fall into the trap set by insiders. “The latecomers, skeptics, amateurs, and the timid are finally overcome by greed and rush into the trap, cash in hand,” Kiyosaki wrote. It’s not long before reality and distress sets in… Terror sets in, and they begin to sell.”
Stage 5: The Market Reverses, and the Boom Turns into a Bust. Easy money’s completely gone and losses start to accumulate. Or as Kiyosaki’s “rich dad” put it, “This is when God reminds you that you’re not as smart as you thought you were.”
Stage 6: The Panic Begins. The amateurs are almost completely blown up by now and controls might be installed to somehow stop the bleeding. That’s when pros start licking their chops. “They’re like a hibernating bear waking after a long sleep and finding a row of garbage cans, filled with expensive food and champagne from the party the night before, positioned right outside their den.”
Stage 7: The White Knight Rides In. When it gets really bad, the government steps in, like it did in the 90s after real estate went bust. “As it often seems, when the government does anything, incompetence is at its peak,” Kiyosaki wrote.
It might be a good idea to keep these stages in mind when trading your bitcoins and other cryptocurrencies.
