Education 2. Experience 3. Excessive cash Sharon's Notes The SEC defines an "insider" as anyone who has informa- tion about a company that has not yet been made publicly available. The Securities Exchange Act of 1934 made it ille- gal for anyone who had non-public information on a com- pany to profit from that information. This includes the insider as well as anyone to whom he or she gives a "tip" who subsequendy profits from the information. Robert's use of the word "insider" defines investors who have management control over the operations of the busi- ness. The inside investor has control over the direction of the company. An outside investor does not. Robert Chapter 26 The Ultimate Investor The ultimate investor is a person such as Bill Gates or Warren Buffet. These investors build giant companies that other in- vestors want to invest in. The ultimate investor is a person who creates an asset that becomes so valuable that the asset they created is worth literally billions of dollars to millions of people. Both Gates and Buffet became rich-not because of their high salaries or their great products but because they built great companies and took the companies public. While it is not likely that many of us will ever build a Microsoft or Berkshire Hathaway, we all have the possibility of building a smaller business and becoming wealthy by selling it privately or selling it publicly. Rich dad used to say, "Some people build houses to sell; others build cars, but the ultimate is to build a business that millions of people want to own a share of." The Investor Controls Possessed by the Ultimate Investor 1. The control over yourself 2. The control over income/expense and asset/liability ratios The Ultimate Investor 287 3. The control over the management of the investment 4. The control over taxes 5. The control over when you buy and when you sell 6. The control over brokerage transactions 7. The control over the E-T-C (entity, timing, charac- teristic) 8. The control over the terms and conditions of the agreements 9. The control over access to information 10. The control over giving it back, philanthropy, redistri- bution of wealth The Three E's Possessed by the Ultimate Investor 1. Education 2. Experience 3. Excessive cash Sharon's Notes There are advantages and disadvantages of "going public," which we will discuss in greater detail later. However, here are a few of the advantages and disadvantages of an initial public offering (IPO): Advantages: 1. To allow business owners to "cash in" some of their equity in the business. For example, Gates's original partner, Paul Allen, sold some of his Microsoft shares in order to buy cable TV companies. 2. To raise expansion capital. 3. To pay off company debt. 4. To raise the company's net worth. 288 Rich Dad's Guide to Investing 5. To allow the company to offer stock options as ben- efits to its employees. Disadvantages: 1.