Page 151 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

In business, a business advantage can be priceless today and worthless
tomorrow.

2. Credibility. We had to know who the information came from. Were our
sources credible and reliable? Unfortunately, in the world of money, most

people get their financial information from people they work with or
salespeople—people who are struggling for money as well. They may be
good, honest people, but they are not credible or reliable sources of
financial information.

3. Classification. In the military, I learned to sort information into
categories. For example, top-secret information was only available to those
with top-secret clearances.

In the world of business and investing, top-secret or classified
information is known as insider information. When the average investor
hears the term, he or she thinks of illegal information . . . and sometimes it

is. Insider information is illegal when a person receives information from
someone inside a public company and uses it to buy or sell that company’s
shares.
In reality, all information is inside information. A more important
question is, how far from the inside are you? By the time a person hears a

hot tip about a company’s new product or news that a company is in
trouble, people on the inside and close to the inside have already traded on
that information. The battle has already been won, and the average investor

has lost.
Let me make it clear that I do not encourage or condone illegal insider
trading on information. The distinction I want to make is about the
importance of being on the inside and getting close to the information. One
of the reasons I love being an entrepreneur and a real estate investor is

because I am a legal insider who can trade on inside information. Since I
am not a public company, I can also freely tell my friends what I know and
how I am investing.

In the stock market, professionals know that amateurs trade on ancient
history. That is how professionals make their money. They make money