In This Episode

Robert Kiyosaki is author of the #1 personal finance book Rich Dad Poor Dad . He joins Porter and Buck to tell you what shaped his life and what gave him the drive to become a world-wide entrepreneurial success. Robert talks about failing fast to meet your goals, why he volunteered to fight in Vietnam, and the one Rich Dad edge he uses for investing in real estate that can produce “infinite returns.”

Buck and Porter discuss why oil is getting more expensive, the insane saga of the FBI possibly spying on Donald Trump, and why Starbucks could be in for a rude awakening with their new business policy.

Anthony S. writes in with a useful tip on tracking bond prices, and Steve H. asks Porter to speculate on the next major bankruptcy in America following the fall of Toys R Us.


Featured Guests

Robert Kiyosaki
Robert Kiyosaki
Best known as the author of Rich Dad Poor Dad—the #1 personal finance book of all time—Robert Kiyosaki has challenged and changed the way tens of millions of people around the world think about money. He is an entrepreneur, educator, and investor who believes that each of us has the power to makes changes in our lives, take control of our financial future, and live the rich life we deserve.
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Transcript

Robert Kiyosaki is author of the No. 1 personal finance book Rich Dad Poor Dad. He joins Porter and Buck to tell you what shaped his life and what gave him the drive to become a world-wide entrepreneurial success. Robert talks about failing fast to meet your goals, why he volunteered to fight in Vietnam, and the one Rich Dad edge he uses for investing in real estate that can produce "infinite returns."

Buck and Porter discuss why oil is getting more expensive, the insane saga of the FBI possibly spying on Donald Trump, and why Starbucks could be in for a rude awakening with their new business policy.

Anthony S. writes in with a useful tip on tracking bond prices, and Steve H. asks Porter to speculate on the next major bankruptcy in America following the fall of Toys R Us.


Announcer: Broadcasting from Baltimore, Maryland and New York City, you're listening to the Stansberry Investor Hour.

[Music plays]

Tune in each Thursday on iTunes for the latest episode of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here are the hosts of your show, Buck Sexton and Porter Stansberry.

Buck Sexton: Hey, everybody. Welcome to another fantastic episode of the Stansberry Investor Hour. I am nationally syndicated radio host, and soon-to-be digital TV star, Buck Sexton. And with me here today is the founder of Stansberry Research and invisible-turkey hunter, Mr. Porter Stansberry.

Today we're going to be talking with Robert Kiyosaki, the bestselling author of the Rich Dad Poor Dad series, including Why the Rich are Getting Richer and More Important Than Money. Robert will be appearing with over 25 other finance experts, entertainers, and inspirational speakers at the 2018 Stansberry Conference in Las Vegas this coming October 1 and 2 at the iconic Bellagio resort and casino. Hey-o! When you join us in Las Vegas this October, you'll hear from influential people like Robert Kiyosaki, Jim Grant, Steve Forbes, Erez Kalir, Trish Regan, Penn Jillette, Dr. Lacy Hunt, and maybe Buck Sexton, if they let him come along, just to name a few.

And of course, the entire Stansberry crew of editors and analysts will be there. You'll have new ideas from Porter, Steve Sjuggerud, Doc Eifrig, Dan Ferris, Bryan Beach, and Dave Lashmet. Get all the details at stansberryvegas.com. That's www.stansberryvegas.com. Register today.

And remember: you can get transcripts from Stansberry Investor Hour, additional information about our guests, and be notified each Thursday when we publish a new episode by going to investorhour.com and entering your e-mail. Again, investorhour.com.

All right. With that, let's get started. Mr. Porter, what is going on with oil? It's getting more expensive.

Porter Stansberry: Buck, I appreciate you asking. And I would beg you – I don't think I've ever asked you to read any of my work before. I don't think I've ever said, "Please read something that I wrote."

Buck Sexton: Yeah. I just read it because I work with you guys. But sure.

Porter Stansberry: There is something I want you specifically to read. Go back and read the July 2014 issue of my newsletter. It's an open letter to Devon Energy company.

And if you're a subscriber and you have access to this in the archive, I would urge you to go read it as well. If you're not a subscriber, this letter alone is worth the $100 or whatever it's going to take for you to get access to it.

It describes exactly what's happened in the American oil business and what's going to happen. And I wrote this four years ago. And we are still in the process of everything I wrote in that letter. And I warned the board of Devon that they were going to lose billions on their investments in this basically roof tar, this Alberta oil sands stuff that they were buying. And I warned them that if they didn't position their company to export oil from America, they would be the losers in the space.

There was crickets from them. I got no reply. And everything I warned them about in that letter has happened. Their stock is still down 50% from then. So over four years, the investors have not only not made any money in Devon; they've lost about 50%.

And the problem is that Devon owns a very expensive energy source, which is oil sands, and owns it in Canada, where it can't be exported. What you want in American oil patch is in Texas or connected to the pipelines that lead to the Gulf Coast where it can be exported.

American exports of energy are soaring and they're going to continue to grow and grow and grow. And you see this because there's a big gap between the global price of oil, which is known as Brent, and the local price of oil, which is known as WTI.

And that gap is now at one of it's all-time widest points in history, almost $10 difference per barrel. So if you can export your oil, it's worth more.

If you want to see a well-run energy company in America, look no further than EOG. And if you compare the two charts, EOG to Devon, you'll see immediately what that means financially for investors. EOG's been a great investment; Devon's been a terrible investment. And I urge you to read that July 2014 newsletter because I lay out exactly what was going to happen and exactly why.

Buck Sexton: But why is the price of oil going up?

Porter Stansberry: Well, oil is energy. And you can never have a lasting shortage of energy. Because people always want more energy and they always will.

And oil is very transportable. So it's a very dense source of energy, very easy to transport, and it's used all over the world as a primary energy source. Always will be.

Sorry, but there's this thing called night. You're not going to ever replace the base load power on the grid with solar. Sorry, Jimmy in the control booth. Your solar – your leaky roof is not going to solve our problem.

Country Club Guy: Hey, Jimmy, go move to California. They're going to require it, what, next year or so?

Buck Sexton: By 2020 I think. Or 2022.

Porter Stansberry: Don't even get me started on all that nonsense.

So, Buck, that's what's up with oil. There's a lot going on. Obviously, it's supply and demand. We've been working off excess supply. The Saudis have cut back production. Those are all big factors. But the main factor is there's a reason why the price of oil always rebounds.

And, by the way, eventually the price of oil will collapse again just like it collapsed in 2015. It'll happen again.

By the way, I'm not sure: that newsletter I'm quoting – it might be July 2015. Country Club Guy, will you verify for us?

Country Club Guy: It's July 7, 2014. Don't ever –

Porter Stansberry: 2014.

Country Club Guy: Don't ever question your memory.

[Crosstalk]

Porter Stansberry: My elephant brain has been slipping lately.

But I really do think that's one of the finest pieces of research I ever did. I just saw all that happening and I understood that commodity cycle so well.

It started as early as 2006 when I began writing that there would be a boom in production of oil and gas because of new fracking and horizontal drilling technologies and there was. It was a tremendous boom.

Oil production in America doubled from 2005 by about 2014. So it took about seven years to double production. The last time American production doubled, it took 25 years. I mean, this is a real big oil boom, and I still don't think most people understand the economic impact of it.

We have discovered something like 20 new Persian-Gulf-size reserves in the continental United States alone. And it's going to get produced. There's going to be more and more production. And that'll limit the price increase. I don't think you're going to see oil go up much above $80 in the next four or five years.

But we can make a lot of money pumping oil at $70 to $80. And we can be competitive globally with any producer in the world with the fields and the technology that we have currently. And of course the technology will get better.

So I think it's an exciting time for the American oil industry. I think it's a great thing for investors. And I think it's the No. 1 reason why our currency has been so strong relative to commodities. Because that big drain on our trade balance because of the need to import oil has gone away.

We still do import oil because we want a particular type of oil for the refineries we have. But we don't have to import oil anymore. And on a net basis, America is an energy exporter for the first time since 1949. So these are all great things for our country.

But it doesn't mean that oil's going to go over $100 and it doesn't mean that oil's going to crash any time soon below $50. I think you're going to see oil trade in a range between $60 to $80 for a number of years.

Buck Sexton: What do you think about Starbucks' policy that you no longer have to buy anything? I want the pee rent on this one. If you're Schultz – he's the chairman of Starbucks – and you're trying to turn your stores – maybe some of them are franchised. I don't know what the model is for Starbucks.

Porter Stansberry: No, they're all corporate-owned.

Buck Sexton: Oh, they're all corporate-owned. Okay. So you're trying to turn your corporate stores into the equivalent of an interstate rest stop circa 1985, this is the best way to do it.

Porter Stansberry: I think it's a disaster. And the Starbucks that's near our office is now homeless central. I mean, homeless central. It's awful. No one will go in there anymore. I would short the stock. No kidding.

Buck Sexton: I was about to say: Do you think that this actually is going to have economic impact?

Porter Stansberry: Disaster. You know, Starbucks used to be seen as a very upmarket place where you could go and buy expensive coffee. You're going to combine that with the economics of the local public library. This is a very poor choice.

Buck Sexton: Yeah [laughs]. And I have to say: They got into this whole situation because of really two incidents that they say were racial bias about using the bathroom. But think about what this is going to do now.

Because they've since given a little additional guidance because people like me and the rest of the country have said, "This is crazy. You can't allow unfettered usage of your – not just the bathroom – the facility for whoever just wants to come in there," which is now the new policy. They're saying –

Porter Stansberry: Yeah. So you can't do drugs and you can't sleep, right?

Buck Sexton: That's right.

Porter Stansberry: That's the two guidelines?

Buck Sexton: That's right [laughs]. Those are the two guidelines.

Porter Stansberry: Jeez.

Buck Sexton: Which, by the way, do we think that the first time they wake up a certain person of a certain background or they think that there are some shenanigans driving customers away going on that they're not going to be accused of bias now under this new policy?

In fact, it makes it worse. Because it's now open to the discretion of: it's just whatever the manager says. It's not based on whether you're a customer.

Porter Stansberry: I tell you: there's a Chipotle down the street too. And I love Chipotle's products. I hate going in there because they won't keep the beggars out. So you're sitting there eating your lunch and a homeless person's walking around panhandling in the restaurant.

And I'm like, "Come on."

So we need a new fast food chain that will serve coffee and high-quality food and keep all the bums away from the customers. Can somebody please do that for us? That's the stock I want to invest in.

But, listen, let's talk about the insanity that keeps getting more and more insane. So, Buck, tell us how this is all going to end up. Was the FBI spying on the Trump campaign? And how long will it be before we have like a real congressional spotlight hearing like we had with the Iran-Contra stuff?

Buck Sexton: So, very good questions. A lot going on. For anybody who doesn't know, which I think is probably not a single person listening to the podcast, but in case someone just came back from vacation or missed it, you now have all these reports about a Cambridge professor who's used as an FBI spy. The Washington Post had some great euphemism: "Helping the FBI collect information for the purposes" – spying. You're spying for the FBI. That's what you're doing. I mean, you could call him a confidential informant, but that's just the law enforcement term for spying.

Porter Stansberry: For a spy.

Buck Sexton: Yeah. For a spy. And I know because I actually used to run confidential informants for counterterrorism investigations. So this is a whole other part of things. But here's what's gone on. Now you've seen a massive shift of people saying – originally, if you or I were like, "You know, it does seem like there was some weird, intrusive government surveillance" – also could be called spying – "going on of a presidential campaign during the campaign" – we've gone from "There's no spying; you're crazy" to "Of course there was spying; we would've been crazy not to do it."

And it's happened in like the space of a week or two. And it's because they can't hide this anymore. They've been trying. DoJ, FBI have been stonewalling on this stuff left and right.

And they've really run into a constitutional standoff because, at the end of the day – and this is what I have to remind some of my colleagues and friends on the liberal side of things – the Congress created the Department of Justice. The Department of Justice is not a constitutionally-mandated organization, period, full stop. In fact, there was no DoJ until 1870.

So when Congress wants to look at something, Congress gets its questions answered. And when the president gives an order to the DoJ, they actually do not have the right to ignore it.

So there's a few pieces, a few things going on here. But if you're asking what's going to happen at the end, I don't see anybody really going to prison for any of this stuff because they're abusing their government power and the discretion that they had, and abusing government power is very rarely criminally charged.

Meanwhile, as a citizen, as a civilian, any violation of the law and you're screwed. In fact, they can just come after you for the perception of violations and put you through a process that will bankrupt you, ruin your reputation, and by the time you actually prove your innocence, they've already gotten their way. So that's what we're heading toward now. Trump is fighting back. I think that the Deep State's been put on notice.

There is a Deep State. There's no question about it. They leaked this source to the New York Times and to others on a Friday before a royal wedding, folks. I mean, this is as clear a political maneuver from the DoJ as it gets. And then they turn around and say, "We can't talk about this source. This is classified." Somebody leaked it from inside of DoJ. This is based on the news reports.

Look, there was no Russia collusion. It's a fantasy that people were telling themselves. Hillary was a terrible candidate. She's also, from what I understand, a horrible human being, and we all need to move on. That's really where it is.

Porter Stansberry: [Laughs].

[Music plays]

Buck Sexton: Our guest this week is Robert Kiyosaki, best known as the author of Rich Dad Poor Dad, the No. 1 personal finance book of all time. Wow. Robert Kiyosaki has challenged and changed the way tens of millions of people around the world think about money. With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage, and has become a passionate and outspoken advocate for financial education. Robert's most recent books, Why the Rich are Getting Richer and More Important Than Money were published in the spring of this year to mark the 20th anniversary of the 1997 release of Rich Dad Poor Dad. That book and its messages, viewed around the world as a classic in the personal finance arena, have stood the test of time.

Robert will be appearing at the 2018 Stansberry Conference in Las Vegas this coming October 1st and 2nd at the Bellagio Resort & Casino. And he's here with us today to tell us what's new in the Rich Dad world. Please welcome, everybody, to the Stansberry Investor Hour, Mr. Robert Kiyosaki.

Porter Stansberry: So, Robert, as I'm sure you expected I dug into your background and read a bunch stuff about your business and your investment philosophy in preparation for the interview. But the thing that really stuck out to me most was the fact that you volunteered for Vietnam and you served as a gunship pilot. I don't know if that's something that you ever discuss. But would you tell us why you decided to do that and what you learned there?

Robert Kiyosaki: Well, that was 1969 and I had a high-paying job with Standard Oil of California. I was a tanker officer. And the Vietnam War was raging on and I was draft-exempt because if you're in the oil industry you don't have to fight. But my conscience got to me so I volunteered with the U.S. Marine Corps and they sent me to Pensacola, Florida. And I was in the C-130 program, the four-engine transports. But the war was winding down so I went to my monitor, guy who schedules you, and said, "What's the fastest way to go to Vietnam?" And he says "Gunships." I said, "Why?" He says, "Because they're dying, idiot" [laughs]. So I volunteered. And they sent me to Pendleton and straight to Vietnam. Do not pass go.

Porter Stansberry: And why did you do that? Why did you intentionally volunteer for what was absolutely the highest-casualty-rate part of the Marine Corps in Vietnam?

Robert Kiyosaki: Well, by then I was – Marines aren't the most intelligent guys, as you know [laughs]. I just wanted to go. It was just kind of a – I just wanted to go. That was it. I didn't want to miss it. Because I had seven uncles go to World War II. And I'm Japanese. And so they had a lot to prove, if you know what I mean. So they fought in Italy and Germany. And I had two uncles that were captured by the Japanese in the Philippines. They were tortured.

Porter Stansberry: Oh God.

Robert Kiyosaki: So it's kind of in the family tradition.

Porter Stansberry: I see. That makes a lot of sense to me then. Anyways, I was very impressed by that. My biological father went to Vietnam and unfortunately he didn't make it back.

Robert Kiyosaki: Oh no. Sorry to hear that.

Porter Stansberry: Yeah. And that's something that's important to me: that you served over there.

Robert Kiyosaki: Yeah.

Porter Stansberry: So that's commendable. And the next thing –

Robert Kiyosaki: The saddest part was: as a pilot, you sit there and you wait for your friends to come back and they don't come back. They just disappear.

Porter Stansberry: Yeah.

Robert Kiyosaki: That's hard. Oh my God.

Porter Stansberry: I absolutely can't imagine that. Haven't experienced anything like that in my life, fortunately. The next thing I wanted to get to – again, this is not quite where the audience probably thought the interview would go, but I grew up in central Florida and I had the good fortune to spend a lot of time at the beach. My great-grandfather had built a small beach cottage and my family spent every August all month long at this little tiny shack. I mean, when I say my family had a beach house, you're envisioning wealth. Trust me: that wasn't the case. This thing was an advanced camper [laughs]. But I probably bought a dozen different nylon surfer wallets between –

Robert Kiyosaki: Oh my God.

Porter Stansberry: – 1982 and 1986. And I'm sure at least several of them you're responsible for.

Robert Kiyosaki: Right. I started a business around 1978, and as any entrepreneur, we struggled for a while and then all of a sudden it just took off.

Porter Stansberry: And I still see those wallets today in my surfer friends' hands. Someone's still making them and selling them. But, man, you were part of an enormous wave of surfer fashion. And when you started making those, did you know that surfers would buy them? Or is that just what happened once you started making them?

Robert Kiyosaki: Well, the story goes: I went to the U.S. Merchant Marine Academy in Kings Point, New York. You know, had a choice between Naval Academy and Kings Point. And I took Kings Point. And we're always on the water. And our leather wallets rotted after a while. So we started sewing old sails to make nylon wallets to carry our money and things in. And so that was the genesis of it.

So, a number of years later after return from Vietnam, there's guys saying, "Well, what products should we make?" And I said, "Well, I used to make this little goofy wallet." And that's how it started [laughs].

Porter Stansberry: That's a brilliant idea. I had never heard that story. I appreciate you telling me that. Of course. That makes complete sense. And now I know why my boat crew always has the nylon wallets as well as the surfers: because the leather rots in the sea air.

Robert Kiyosaki: Right. It was just to carry some money all that so we could go to the bar and have fun. That was about as serious as it was when it started.

Porter Stansberry: And then I wanted to ask you: my mentor in business is a guy by the name of Mark Ford. And when he was about 26 or 28 years old, he went to a Dale Carnegie seminar. I don't know if you know anything about the Dale Carnegie seminar businesses. I've never been to one myself. But my mentor in business, Mark Ford, went to this seminar and it was transformative for him. It made him really focus on what he wanted to do in his life and he realized that that was business. And from that point in his life forward until he was probably in his late 60s, he didn't allow anything to get in the way of him and his business goals.

And it took a toll on his family; it took a toll on his friends. But he knew that was the most important thing to him and he wasn't going to hide who he really was and he went forward and has been very successful, started a number of businesses, including helping me start my business, which has about a million paying subscribers in virtually every country in the world. So that seminar meant a lot to him and he was able to put those ideas into good use.

And I know in your backstory that you also had a transformative experience at a seminar. And this seminar was called "EST" I believe, if that's correct, Robert. And can you tell us what that experience meant to you and how that led to your success as an entrepreneur?

Robert Kiyosaki: Well, that's a great question. Because the story of Rich Dad Poor Dad – my poor dad was a PhD from Stanford, University of Chicago, and Northwestern. And when I started going to seminars, he says, "What's wrong with you?" Whereas my rich dad was a guy who went to Dale Carnegie seminars [laughs].

Porter Stansberry: Ah.

Robert Kiyosaki: And so when I came back from Vietnam in '73, I got into the MBA program. And I was just bored stiff. I couldn't listen to the guy. And my rich dad saw that I was keeping my poor dad happy because I'm getting my MBA. And then my rich dad was my best friend's father. He says, "Look, you gotta take a real estate seminar." And ever since then, kind of like Warren Buffett – you know, Warren Buffett holds his Dale Carnegie certificate on his wall, not his college degree.

And for entrepreneurs, I think seminars are the better way to go because you're not there for the PhD or the MBA and all that stuff. You're just there to learn from real teachers, if you know what I mean. When I was in the MBA program, my accounting teacher wasn't an accountant. He was a Master's of Accountancy but he didn't know anything about accounting. I was going nuts.

Porter Stansberry: Yeah. We can spend the entire next week talking about the ridiculous inadequacy of financial education all the way through the PhD level. I mean, nobody teaches finance in any way that's useful at any college in America. And I hire analysts – because mostly what we do is investment research. I hire analysts outta college and I have to start from scratch with them because they don't have any idea what they're doing.

Robert Kiyosaki: No. They're not practical.

Porter Stansberry: No. Zero.

Robert Kiyosaki: I don't need some alphabets after my name. I just need to have my financial statements tight.

Porter Stansberry: And, Robert, the thing on the finance side of things: not only are they not practical, but what they've been taught is actually wrong. What they've been taught is something called the "efficient market hypothesis," which says essentially that doing any of your own research is useless because having knowledge won't help you because the market already has it. It's completely insane and these kids all believe this stuff [laughing].

Robert Kiyosaki: Oh my God. I've hired MBAs and it's the most expensive waste of time they've ever gone through.

Porter Stansberry: All right. Let me get to – I want to touch one more thing about this learning aspect.

Robert Kiyosaki: Sure.

Porter Stansberry: So one of the things I write to my subscribers – I write to all of our paying subscribers once a week on Fridays. And I always try to teach them something. Most of my business is really just about education. And so at the start of each message, I always remind them: "Look, there's no such thing as teaching; there's only learning." And I absolutely fundamentally believe that. So I try very hard to get them to do things like paper trading, which is essentially like playing a game to learn how to actually invest.

Robert Kiyosaki: Correct.

Porter Stansberry: And I know that you have a brilliant model for allowing someone to learn. Can you talk about how important that is to your success as a person and the people who follow your investment ideas?

Robert Kiyosaki: Well, Porter, as you and I know, the way human beings were designed to learn is by making mistakes. You know what I mean? So you go to school and they tell you not to make mistakes. Which is ridiculous. Whereas my rich dad taught me to be an investor using Monopoly. So after I worked for him – I had to work for him for free starting at the age of nine. And then he would break out his Monopoly board and his son and me would just play Monopoly. And as we were playing, he would coach me through the moves. "What're you thinking here? What're you thinking there?" Because as you know, in the real world, there's no answers. There's just: you take this kind of a educated guess. And if you're wrong, you better correct quickly and change direction. You know?

So that's how I learned. And I said, "Why are we playing Monopoly?" And he says, "Because you want to make your mistakes with play money, not real money" [laughs].

Porter Stansberry: That's right. You're going to make plenty with real money in any case.

Robert Kiyosaki: Right. But you want to make as many mistakes as possible so you have an idea of how you respond to different situations, you know?

Porter Stansberry: Yeah. And I also really try very hard to learn from the mistakes of others.

Robert Kiyosaki: Yeah. Well, that's how you learn.

Porter Stansberry: And if you have a business idea and that business doesn't exist at all yet, there's usually a reason [laughs]. Try to find that out before you invest a lot of capital.

Robert Kiyosaki: Right.

Porter Stansberry: The other thing – my other business partner – Mark Ford was my mentor when it came to sort of marketing and sales. And my finance mentor was a guy named Bill Bonner who has written a lot of bestselling books and is a very very wise man. He taught me all kinds of really cool stuff. But the best thing he taught me about business was accelerated failure. It doesn't really matter whether you succeed or fail. But it does matter, if you're going to fail, that you fail fast.

Robert Kiyosaki: That's what I say, too.

Porter Stansberry: And that's something that's very hard for people who are not wired to be entrepreneurs to be comfortable with and to really understand.

Robert Kiyosaki: Right.

Porter Stansberry: I had a rich dad and a poor dad as well. I woulda never thought about it that way outside of your book. But I had a rich uncle. So my dad who luckily adopted me, Frank Stansberry, he worked for the Coca-Cola company. And he had been a journalist. He had a passion for business but he wanted to write about it, not do it. And he isn't a salesman at all. So he was a journalist for Businessweek and then ended up being a PR manager for the Coca-Cola company. And he never made very much money during his career because those aren't really high-paying jobs.

On the flip side, I had an uncle who was a very successful attorney. He was a great litigator and for many years was the top litigator for Jeep Chrysler. And so he had a very high income and has been very successful. And so I grew up seeing these two things for myself and thinking, "Oh, I know what kind of life I want to have. I want to have the problem my uncle has." I mean, my uncle had to have a golf cart to get from his house to his pool. Those are the kind of problems I wanted to have.

Robert Kiyosaki: [Laughs].

Porter Stansberry: But, you know what? My dad did something really smart, which was: the Coca-Cola company had an investment program where they would match up to I think 15% of your salary – if you invested in the stock, they would match your investment in the shares. That was to encourage their employees to become owners of the business, not just wage slaves. And as I'm sure you know, Coke stock did very well over the 30-year period where my father worked there. So he inadvertently became my wealthy father too. And that's how I learned a little about investing.

And I really like common stocks because that's where my knowledge is and that's what I've spent 30 years doing. And I know you really like real estate. And I know you have strong views about whether people should be in stocks or should be in real estate. And I wanted to just talk with you about that for a second. Why is it that you prefer, for average people, real estate over investing in common stocks?

Robert Kiyosaki: That's not quite what I say. I tell people I like real estate. And the primary reason for real estate is: I can use debt – I use 100% debt financing and I pay no taxes. So Trump and I are very similar. He pays zero tax and he uses 100% debt. So that's kind of my game. And I've taken a lot of, should I say, paper courses like stocks and options and all that, and my brain just doesn't function on paper. I'm one of those guys that's gotta – I'm a bubba. I gotta go see, touch, and feel it. Then I understand it. So I don't recommend real estate over stocks. I'm saying: invest in what you love and what you want to get good at.

Porter Stansberry: Yeah.

Robert Kiyosaki: If you don't want to get good at it, don't invest in it.

Porter Stansberry: Robert, I'm the same way. If I want to really understand a company and what their fundamental advantage is – because that's my big thing as an investor: I need to know why Company X is better than Company Y. And I have to go out there and see it myself.

Let me give you one great example. There's a company – you might know it because it's in real estate. It's called NVR. And they're one of the country's largest homebuilders. They're the top three or four homebuilders in the country. And it's so obvious: if you spend one second looking at their numbers – and I know you love to read balance sheets and income statements just like I do. This company earns about 26% or 27% a year on its assets. And no other home builder is above 5%.

Robert Kiyosaki: Wow.

Porter Stansberry: They have such a better business model. They don't own any land. So they don't have to waste time on development. You know how long it takes to permit a new housing development.

Robert Kiyosaki: Right. It's horrible.

[Crosstalk]

Porter Stansberry: They don't do any of that. They don't tie the capital up. Instead, all they do is buy back their own stock. Huge amounts every year. And so, as a result, their share price is now $3,500, $3,000 a share, like in that price range [laughs]. Yeah. And, I mean, I can remember recommending the stock when it was a couple hundred bucks. So having that simple edge, even in a business as plain vanilla and commodity-like as building homes, can be an enormous financial advantage.

Robert Kiyosaki: Correct.

Porter Stansberry: And I wanted to ask you about that. What do you think – because there's a lot of people, Robert, that buy real estate the way that you do. It's not a secret how to do what you do. But you've been particularly successful at it. What is your edge?

Robert Kiyosaki: I use 100% debt. So my returns are always infinite. And then I offset with a depreciation amortization and appreciation. So I pay not taxes. So that gives me the edge there.

Porter Stansberry: That's a pretty good edge. And what do you do when there's any kind of a downturn? Because that debt of course can be a double-edged sword.

Robert Kiyosaki: Correct. But you handle that when you buy. I only buy properties where there's jobs. If there's no jobs, I don't care about the property at all.

Porter Stansberry: Well, that's one very important edge.

Robert Kiyosaki: Right. And then I went to Kings Point, the Merchant Marine Academy. I'm a tanker officer. So I own a lot of oil wells. And, coincidentally, my apartment houses are next to the oil wells.

Porter Stansberry: Also very wise.

Robert Kiyosaki: So that's kind of my little formula. And I just kind of stay in that range. I'm much happier there. Because I understand it.

Porter Stansberry: Speaking of oil wells, have you ever heard – I'm getting back to securities because that's my thing. Have you ever heard of a business called the Texas Pacific Land Trust?

Robert Kiyosaki: No, I haven't.

Porter Stansberry: You would love it. They own all the mineral rights in West Texas. A long time ago a railroad called the Texas Pacific went bankrupt. And to satisfy the creditors, they divvied up all of the land grants that they had gotten from Congress in exchange for building the railroad. And they gave all the land away but they retained all the mineral rights just by chance. And so this thing owns the mineral rights all across the Permian Basin. And so every time somebody drills an oil well, the Texas Pacific Land Trust gets a royalty. And all they do with that royalty is buy back the shares. So, again, this thing has just gone bananas in the last ten years.

But I just bring this up because I love solving problems for people using securities. So you want to be in the oil business but you don't want to go out to Texas and pick wells yourself? Then there's a security for that.

Robert Kiyosaki: That's a very wise – that's your formula. It's good. Very good formula.

Porter Stansberry: I've got one last question for you, Robert, and I really do appreciate your time. And it's a tremendous honor to get to speak with you. I've followed your work for 25 years and it's a pleasure to speak with you.

Robert Kiyosaki: I thank you. I'm a –

Porter Stansberry: Sorry. Go ahead?

Robert Kiyosaki: I'm a subscriber also.

Porter Stansberry: That's great to know. Thank you very much. I want to know what you think about the controversy about your ideas. And I say this with tremendous respect and as someone who has also been dogged by controversy that I never have really fully understood. You say things like "You shouldn't go to college." People who are religious are threatened by the ideas that're in this EST conference stuff. You tell people that just because they have a big education, that doesn't mean that they're smart. And you're not shy about your desire to be rich and your desire for your followers to become rich. And all of that stuff is threatening and off-putting to a huge segment of the population that has been conditioned to believe they should go to school, they should be a wage slave, and that they could never break free of any of those molds.

So how do you – I'm asking sort of a personal question. Because I have a hard time dealing with a lot of the controversy and the anger that my work tends to generate in people. I don't understand it. And I just wonder: how do you handle that? How do you handle the constant personal attacks just because you have a different idea about what life's about?

Robert Kiyosaki: Well, Porter, I tell you what: that is a million-dollar question. You know, when you tell me about your investment formula, I listen to it. It doesn't mean it's good or bad. I have an open mind. I want to listen to it. And some people are threatened by ideas that don't fit their little box. That's horrifying. I don't want to be around those people. So I'd rather just go and blast away and have a good time.

You know, it's like going to Vietnam. I got spit on when I came back. So what do you do? Give in to those cowards?

Porter Stansberry: No, no. That's not what I've done [laughs].

Robert Kiyosaki: No. So that's the whole point. But you look at the stats. Today the No. 1 asset of the federal government are student loans. The No. 1 asset. And they're the worst type of debt you can get into.

Porter Stansberry: Yeah. They're literally slavery.

Robert Kiyosaki: So I think our student loan crisis is a criminal operation. It's fraudulent.

Porter Stansberry: I agree completely. It's the biggest scam out there.

Robert Kiyosaki: So I look at that stuff – yeah. And then I ask the kids when they come out – I say, "What'd you learn about money?"

Porter Stansberry: Nothing.

Robert Kiyosaki: I get this "Duhhh."

Porter Stansberry: Yeah. By the way, I don't think there's –

[Crosstalk]

Robert Kiyosaki: It's criminal.

Porter Stansberry: – 1 American in 100 that even knows what our money is. They don't have any idea what they're being paid and how it loses value and why wages never go up. None of that stuff of course is ever discussed.

Robert Kiyosaki: No. And I was just fishing in Alaska and I was talking to a guy who has a PhD. He's a wildlife biologist. And I was talking about my two favorite subjects, debt an taxes. And his mind shuts off. Said, "I don't want to know about that." So he's an instructor at some university, but they're – my father was a PhD, like I said. They're good people but they're very closed-minded on the subject of money. And that's the problem.

Porter Stansberry: Yeah. I think it's interesting: they're the masters of their own little world. They know everything about that little box. And they don't have any curiosity about other things.

Robert Kiyosaki: Well, when he says, "The government should pay us," and I said, "Government has no money. It comes from taxpayers." And I said, "We're broke."

Porter Stansberry: Yeah. That reminds me of my friend Doug Casey's famous –

Robert Kiyosaki: Oh, he's a great guy.

Porter Stansberry: He is a great guy. His appearance on the Donahue show was one of my all-time favorite things. If you Google it or YouTube it you can find it still, Robert. It's absolutely hysterical. Doug Casey telling an entire room full of TV morons the basics of economics. It's absolutely hysterical. And this is in the late '70s, and Doug's probably in his early 30s, late 20s, and he's wearing a three-piece suit and he couldn't be more arrogant [laughs]. It's so funny to watch. And then finally somebody stands up and says, "Well, I think the government should pay for health care." And that just starts Doug off on a great tirade. But it's a wonderful clip.

And of course I run into it all the time with critics of my newsletters and our business. I mean, it just doesn't make any sense to me.

Robert Kiyosaki: Well, if you don't have critics you're not saying anything.

Porter Stansberry: That's very true. And I print almost every bad piece of feedback we get. Almost every criticism that a subscriber writes to me I print. Almost every one. The ones I don't print are the ones that're just crazy people; I can't make any sense of it. But I've always found that that is the best way to confront your critics: to go ahead and advertise their view so that everyone knows you're not afraid of it and then let the reader decide which guy they want to believe and trust.

Robert Kiyosaki: Yup. And that's really what our society should be. Do you know what I mean?

Porter Stansberry: Free ideas.

Robert Kiyosaki: You're entitled to your point of view.

Porter Stansberry: Absolutely.

Robert Kiyosaki: And that's all I ask. But some people – I think we know who we're talking – I've been attacked since day one by a guy who is supposedly a real estate expert but he owns no real estate. And I have 8,500 units – plus oil wells and golf courses and hotels. And he always says I'm a charlatan. Well, he's the charlatan. Jesus. It's amazing. And people listen to him.

Porter Stansberry: Yeah. It happens to me all the time.

Robert Kiyosaki: Yeah.

Porter Stansberry: And it doesn't make any difference that I publish track records every year, that they're audited. It doesn't matter that I've got 71,000 lifetime customers. You don't get a lifetime customer by not delivering.

Robert Kiyosaki: Correct. And saying something they want to hear.

Porter Stansberry: And helping them, helping them actually succeed.

Robert Kiyosaki: Yeah.

Porter Stansberry: I got all that. And didn't mean to complain about my critics because actually, as long as you spell my name right and put a link in, I'm happy for any press I can get.

Robert Kiyosaki: That's a good idea, yeah.

Porter Stansberry: But I just wanted to ask you about it because I know that you have been a lightning rod for criticism and it's something that has affected me personally, only because I don't want to spend my life in arguments. And people are always asking me to respond to the critics. And I don't want to waste any time doing that. And that's not why I got into business and it has nothing to do with me. It's their problem. So I'm happy to print their views and move along. And I think a lot of people wonder why I don't get more caught up in it. And you just can't.

Robert Kiyosaki: No.

Porter Stansberry: It's like the Lilliputians. If you go to fight with them, there's always another million people who're going to try to tie you up. You just can't do it. You gotta move forward.

Robert Kiyosaki: Yep. And I don't print my detractors, but I just kind of let them have their point of view. I just don't understand why they waste their time attacking me when they could be helping other people.

Porter Stansberry: That's the other thing. They don't do anything to help other people. And we've had – I have all kinds of writers that work for me. We have 500 employees now in my company.

Robert Kiyosaki: Wow.

Porter Stansberry: And obviously I can't edit everything.

Robert Kiyosaki: No.

Porter Stansberry: But we do have a general editorial rule, which is that we live in a glass house so we don't throw stones. And there are certainly people out there that write investment newsletters that I don't approve of. But I don't ever criticize anybody because why would I waste my time trying to improve their product? I'm busy trying to improve my product.

Robert Kiyosaki: Correct. And it's a waste of time. You know what I mean? It's not professional either.

Porter Stansberry: No, it's not. And I always say: it's fine to disagree, but there's no reason to be disagreeable.

Robert Kiyosaki: Right. That's a very good philosophy. I'm honored to be talking to you, Porter. Because, like I said, I'm not in your genre of investing but I've gotta keep an open mind. So I read your trend stuff all the time.

Porter Stansberry: Well, I look forward to seeing you in person and shaking your hand in Las Vegas here in a couple months. And, again, it was a real pleasure for me to speak with you. And I have even more respect for you now that we've spoken.

Robert Kiyosaki: Well, thank you. I have tremendous respect for your work and keep it up.

Porter Stansberry: Will do.

Robert Kiyosaki: We have a lot of education to do [laughs].

Porter Stansberry: That will never end.

Robert Kiyosaki: No. And it's always changing every day.

Porter Stansberry: Great. Have a wonderful evening, Robert. Thank you for your time.

Robert Kiyosaki: Yeah. Same to you, Porter. Thank you.

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Buck Sexton: All right. Let's get into it. Thanks again to everybody for writing into the mailbag. We appreciate it when you fill our inbox with useful feedback. People like Dana M., David S., Alec R., Karen T., Bruce C., and Paul M., just to name a few. Your comments and questions are an important part of the show. Keep them coming. Write to us: [email protected]

All right. First up here: Anthony S. "Porter and Buck, I've enjoyed listening to all of your episodes over the last year. Keep up the good work. You guys are one of the three podcasts I listen to every week. I know you consider Toys "R" Us the canary in the coal mine, Porter, but who do you think will be the next major company to file for bankruptcy?" Good question.

Porter Stansberry: That's a tough one.

Country Club Guy: JC Penney?

Porter Stansberry: Yeah, off the top of my head, I think that I'd go with Sears or JC Penney. And Sears probably already kind of has. They're doing this really unusual restructuring that will essentially leave the equity worthless but not technically default. They've done something very clever: the hedge fund that owns/controls Sears sold a whole bunch of CDSs. That is, they sold a whole bunch of insurance against insurance against their bonds. And so they're buying the bonds back, because they're trading at a huge discount, so that they won't technically default. And then, meanwhile, they're selling assets from Sears to pay the hedge fund for the bonds. Actually the investors are alleging illegal market manipulation because of what they're doing.

So I don't know whether it'll be Sears or JC Penney or one of the really beaten-up malls. But I think you're going to see the next major bankruptcy come from the retail space.

Also I think it's interesting that – I think Sprint would've gone bankrupt in the next 24 months except for the purchase that seems to be underway –

Country Club Guy: SoftBank. Is it SoftBank?

Porter Stansberry: No, no. It's the other telecom company.

Country Club Guy: T-Mobile?

Porter Stansberry: T-Mobile. And if that deal falls through, if the T-Mobile deal falls through – and I think it's likely that the Justice Department's not going to allow the merger – I think that Sprint would be very high on that watch list.

Buck Sexton: All right. Next up here in the mailbag. This here from Steve H., an Alliance member. High five, Steve. "Gentleman, in regard to the listener that wrote in looking for a resource for bond pricing and details, FINRA.org has a free watch list on their market data page that will track bonds. Hope this helps. From Steve." All righty.

Porter Stansberry: Yeah. You can also type in "Morningstar bond prices" and the FINRA Morningstar page will come up. And you can enter in bonds. What the guy asked was: is there a way to do like a model portfolio of bonds? And I don't think the website supports that. I might be wrong. You can just do sort of one quote at a time as far as I know.

Meanwhile, Stansberry Terminal is coming. And we will definitely have bond quotes and bond portfolios in Stansberry Terminal. Just saying.

Buck Sexton: All right. Next up, David O. from Quebec City, Canada. Bonsoir, David. We have: "Congratulations to Big P and Le Buck for a fine duo. What I like most about the show is that neither of you will sell out your integrity to please the crowd. A question for Le Porter. Since real agricultural prices tend to be low and volatile and since you can't farm without debt, most farmers are light on cash and heavy on assets. Farm equity may be high, but with the return on assets not keeping up with the average interest rate paid, it's a perpetual Kiyosaki rat race. What financial advice would you give young farmers who want to escape the irony of living poor and dying rich besides tuning in to the excellent Stansberry Investor Hour podcast of course? Fantastic, monsieur, and merci beaucoup." From David up in Canada.

Porter Stansberry: I would lease my farmland to someone else and get into a better business.

Buck Sexton: All righty. There you have it, folks.

Porter Stansberry: Sorry. It was a short answer. But you're not going to be able to square that circle. Commodities are a tough business. They're not scalable. As you say, it's asset-heavy. So, instead of being a farmer, I would seek to get a royalty stream. So I would seek to lease the land to someone who wants to farm and go do something else.

Buck Sexton: Yeah. Farmer suicide is actually very very high, by the way, as professions go in this country. So it's a tough business, getting tougher. A lot of people very deep in debt.

Porter Stansberry: Very tough business. The only real way to make money as a farmer of course is to buy farmland that you can get titled for development eventually. So you farm for the first five years and then you sell it to a real estate developer for the money.

Buck Sexton: Or to grow things that aren't technically legal.

Porter Stansberry: [Laughs]. I don't know anything about that. We grow corn and soybeans and we don't make any money at all. I think my total net income in my farming since 2013 when I bought the farm – so we're on year five – is something around negative $250,000. And, Buck, you know what the corn farmer told the media after he won the lottery, don't you, when they asked him what he was going to do with all the winnings?

Buck Sexton: I do not.

Porter Stansberry: He said, "I'm going to farm it till it's gone."

Buck Sexton: All right, everybody. That's another wonderful episode of the Investor Hour in the bag. If you have a question for us, please write to [email protected] That's [email protected] If we use your question on the show, we'll send some Stansberry Research goodies. Love us or hate us, just don't ignore us. Thanks again everybody for listening. See you next time.

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Announcer: Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to InvestorHour.com and enter your e-mail. Have a question for Porter and Buck? Send them an e-mail at [email protected] If we use your question on air, we'll send you one of our studio mugs.

This broadcast is provided for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

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