I am often asked, "Why does a qualified investor need to understand both fundamental investing as well as technical ABC Corporation Financial Statement Important Skills: • Financial Literacy • Basics of Financials • Economic Forecasts Educational Tools: CASHFLOW, Investing 101 CASHFLOW for Kids ABC Corporation Stock Prices Important Skills: • Stock Price and Sales History • Puts/Calls Options Techniques • Short Selling Educational TooL- CASHFLOW, Investing 202 252 Rich Dad's Guide to Investing investing?" My answer is found in one word: "confidence." Average investors feel that investing is risky because: 1. They are on the outside trying to look into the inside of the company or property they are investing in. If they do not know how to read financial statements, they are totally dependent on others' opinions. If only at an unconscious level, people know that insiders have better information and therefore lower risk. 2. If people cannot read financial statements, their per- sonal financial statements are often a mess. And as rich dad said, "If a person's financial foundation is weak, his or her self-confidence is also weak." A friend of mine, Keith Cunningham, often says, "The main rea- son people do not want to look at their personal finan- cial statements is that they might find out they have financial cancer." The good news is that once they cure the financial disease, the rest of their lives also im- proves-and sometimes 'even their physical health too. 3. Most people know how to make money only when the market is going up, and they live in terror of the mar- ket coming down. If a person understands technical investing, he or she has the skills to make money when the market goes down as well as when it goes up. The average investor without technical skills makes money only in a rising market, often losing all he or she has gained in a falling market. Rich Dad said, "a technical investor invests with insurance from huge losses. The average investor is like a person flying a plane without a parachute." As rich dad often said about technical investors, "The bull comes up by the stairs and the bear goes out the window." A The Qualified Investor 253 bull market will rise slowly, but when it crashes, the market is like a bear going out the window. Technical investors are ex- cited about market crashes because they position themselves to make money quickly when average investors are losing their money, money that often increased very slowly. So the chart of various investors and their returns often looks like this: Market UP DOWN Losing investor loses loses Average investor wins loses Qualified investor wins wins Many investors often lose because they wait too long to get into the market. They are so afraid of losing that they wait too long for proof that the market is going up. As soon as they enter, the market peaks and crashes and they end up losing on the way down.