In recent posts on X, financial influencer Robert Kiyosaki has predicted an upcoming asset crash. He believes this will be the best time to build wealth and get rich — by investing in assets like gold, silver and bitcoin at a discount after the crash.
Kiyosaki sees crashes as an opportunity to build wealth. In a recent post on X, he noted, “Crashes are the best time to get rich. Bargains will float to the surface.” And he’s not alone in this thinking. “By continuing to buy shares when the market is down, you may lower the overall price you pay per share and position yourself for growth when stocks inevitably recover,” per Forbes .
The hardest part of capitalizing on a market crash is the timing. Kiyosaki has a history of trying to predict where the market will go. And while many of Kiyosaki’s arguments for a market crash are sound, trying to make predictions about market timing can be risky.
Kiyosaki has been predicting a crash since at least 2011. Between 2011 and today, there have been several smaller market downturns, as well as the COVID-19 crash, but overall, the stock market has more than tripled.
Part of the reason we haven’t seen another crash is because of Federal Reserve intervention. It’s a possibility that the tools the government uses to soften recessions may fail in the future, but making predictions about such things can be difficult because of the number of factors involved.
Economics has its rules, but it is not an exact science, and the government has the power to overturn the table and change the rules when it needs to.
The Federal Reserve has tools for fighting recessions. When things begin to look bad, the Fed can lower interest rates to make money easier to borrow and stimulate the economy. If rates have already been lowered and the economy still looks bad, the Fed can also “print money” and buy Treasurys — which essentially comes down to the government loaning itself money. When the Fed does either of these, it usually has an inflationary effect. Quantitative easing in particular has been found to increase the prices of investments such as real estate.
Central banks worldwide have played a significant role in preventing serious recessions by injecting liquidity into the markets. These measures have helped sustain consumer spending and business investments in times of economic slowdown. However, they may have unforeseen consequences in the future.
After the U.S. began to experience a high rate of inflation, the Federal Reserve began to raise interest rates in February 2022 and has kept them high ever since. It’s possible that during the next crash, the Federal Reserve will not be able to or will not be willing to smooth things out completely by lowering rates or printing money.
Investing During a Crash
So what should you do if the market does crash? There is a metaphor in financial circles that describes the risks of impulse buying during a crash — “catching a falling knife.” If you try to invest in assets that are rapidly losing value, you may end up getting cut.
However, as Kiyosaki has noted, crashes can present wealth-building opportunities. “The sharp declines in stock prices that occur during a crisis or recession may present good opportunities to invest. Some companies may be undervalued by the market. Others may have a business model that makes them more resilient to an economic downturn,” according to Fulton Bank .
The problem is that many people may underestimate a crash. If you buy during the early days of a longer market downturn, prices may continue to fall drastically, and you may end up never making your money back. During the dot-com bubble market crash in 2000, many companies never recovered from their peaks. Those that did took a long time to do so. For example, Amazon stock crashed 90% and took seven years to recover.
If you choose to invest during a market crash, plan for the long term and choose assets that are likely to continue rising in value in the future. However, before making any serious financial decisions, it’s a good idea to consult with a licensed financial advisor who can give you advice tailored to your financial situation.
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