Page 164 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

trend down and bought a lot once the trend reversed. One of the reasons I
like gold and silver is because there is always a market for it. It is relatively

liquid, and if I need cash, I can get cash pretty quickly.

Less Liquidity, More Information

In real estate, the trend is a large percentage of baby boomers’ retiring to
Arizona and Nevada. So I invest in those states. Due to the loss of jobs in

Detroit, people are moving out of Detroit, which is pushing housing prices
and rents down. It will be a number of years before that trend changes.
Since real estate is much less liquid than gold, silver, and stocks, I need to
be much more cognizant of trends.

After August 9, 2007, many homeowners, flippers, and real estate
developers with overpriced condos are finding it hard to become liquid
again. Instead of selling to get out, all most can do is watch helplessly as the
value of their real estate sinks into the sunset. The lesson is: the less liquid

an investment, the more trend information you need. Many people bought
high and now are faced with selling low. An astute investor knows how to
follow trends in order to buy low and sell high.

The Financial Bird of Prey

Every time I see developers’ construction cranes sitting on high-rise condos
I know the end of the trend is near. Whenever you see construction cranes,
a.k.a. birds of prey, sitting on the skyline, you know the boom is about to
bust. It means that the cycle has peaked, and, generally, there is nowhere to

go but down. The next time you see more than two construction cranes on
the skyline, start selling any piece of real estate you do not want.

History and Cycles

A final thought on trends is the importance of history and cycles. Having

survived a number of up and down markets, I have learned a lot from
history. There is one historical financial trend I believe is worth watching.