Page 165 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

That trend is the twenty-year cycle between stocks and commodities. As a
person who sailed for an oil company and flew helicopters in search of

gold, I became curious about why the prices of commodities went up as
stock prices came down. A few years ago, I came across a book written by
one of my favorite financial authors, Jim Rogers, entitled Hot Commodities.
Rogers discovered that stock prices went up for twenty years at the same

time as commodity prices came down.
For example, from 1960 to 1980, just as I was coming of age,
commodity prices such as oil and gold were rising. In 1980, oil, gold, silver,
and real estate prices came down rapidly as stock prices started climbing.

Between 1980 and 2000, the stock market was the place to be, and oil, gold,
and silver were dogs. While the commodity market was down, I was buying
all the oil, gold, silver, and real estate I could. On schedule, in 2000, at the
height of the dotcom boom, share prices dropped and commodity prices

came roaring back up. If history repeats, this means that commodities will
come down in 2020 and stocks will be the market to be in again.
Obviously, I do not have a crystal ball. But history does seem to repeat,
and I am old enough to have seen some reruns. If you would like more

information on how a world-class investor such as Jim Rogers analyzes
trends, I recommend you read Hot Commodities, or any other book he has
written. He is a brilliant investor and writer who is an astute observer of
trends. Always remember, “The trend is your friend.” If you ignore the

trend, the birds of prey will pick your bones clean.

In Conclusion

Ultimately, it is not the asset that makes you rich. Information makes you
rich . . . or poor. For example, if I had bought gold at $800 an ounce in

1979, I would still be waiting to make my money back today. Given how
much the dollar has dropped in purchasing power, that means I would have
to wait till gold reached $1,500 to break even today.
The same is true for any asset. For example, in real estate most investors

lose money because of inadequate information and intelligence. That is why
when someone asks me, “Is real estate a good investment?” my reply is, “I
don’t know. Are you a good investor?”