I was wondering what your thoughts were on Robert Kiyosaki's recommendation that a person should become proficient working in the 'B' (Business quadrant) before moving into the 'I' (Investor quadrant). I know that a lot of people try to go directly into the 'I' quadrant from the 'E' quadrant and don't really understand business and, therefore, do not make solid investment decisions. Obviously, everyone comes from a different background... but I was wondering if you have any further insight into this line of thinking?
I guess that I would answer your question by saying that I don’t see much difference between the “I” quadrant and the “B” quadrant.
Let’s take investing in a stock as an example. When you buy a stock, you’re investing in a business. And one of the elements that separates a “B” quadrant business from an “E” quadrant business, is that if you’re operating in the “B” quadrant, the business runs without the business owner having to be actively involved.
That’s exactly what happens when you invest in a stock. You hire others, so to speak, to run your business. And you, as one of the business owners, get passive income in the form of dividends.
Also, the way that I operate in the “I” quadrant is that I look at my positions very much the same way a retailer looks at his inventory. I don’t want my inventory setting on the shelves gathering dust. If my inventory is not performing, I’ll get rid of it at whatever price I can get for it and invest in inventory that hopefully is going to return a profit. If I have inventory that is doing well, I’ll buy more.
I’ve always thought what Robert means by that statement is that in order to be a successful investor you have to be able to think like a business owner. And I would absolutely agree with that.
But I don’t think that you necessarily have to be successful in a traditional business before you can be successful as a trader/investor.