In the summer of 2022, when Gen Yamazaki was diagnosed with esophageal cancer, this most influential economic commentator in Japan decided to do one important thing: distill the wisdom of his 40-year financial career into three financial actions. In the last 18 months of his life, he repeatedly pondered on his sickbed, ultimately leaving his son an investment philosophy shockingly simple—allocate all disposable funds to global stock index funds.
This economic veteran, who has experienced 12 top financial institutions, verified a cruel truth through personal experience: the essence of capitalism is that risk-takers pull money from the pockets of conservatives. And stocks are the core tool of this wealth transfer game.
One, the terminal enlightenment of a financial veteran: all complexity is a scam
After graduating from the University of Tokyo with a degree in economics, Yamazaki successively worked at top institutions such as Mitsubishi Corporation, Nomura Asset Management, and Merrill Lynch. He has seen too many financial magic tricks: complex derivative designs, sophisticated hedging strategies, dazzling asset combinations. But when he lay on his sickbed reflecting on life, he found that these intricate designs were essentially variants of the same thing—how to more efficiently harvest the wealth of ordinary people.
"Capitalism is the game where risk-takers harvest from conservatives." He wrote in his book, "Banks lend out depositors' money, insurance companies invest premiums, fund managers arbitrage management fees. The only way for ordinary people to avoid being harvested is to become capital players themselves."
This veteran who has seen financial storms calculated an account for his son: assuming a 15% annual interest rate on credit card installments, one needs an average stock investment return of 6% for 25 years to cover it. The more ordinary people indulge in consumer credit, the more they become the nutrients at the bottom of the capital pyramid.
Two or three actions to break the wealth dilemma
1. Build a 6-month 'bulletproof wall'
During his tenure at Nomura Asset Management, Yamazaki witnessed countless clients forced to cut losses during market crashes. His first iron rule for his son is: always keep 3-6 months' living expenses in liquid savings. "This isn't money, it's your choice. With this bulletproof wall, you have the right to say 'fuck it' when the market crashes."
2. Buy the entire world's economic growth
While researching global asset allocation at Merrill Lynch, Yamazaki discovered a counterintuitive phenomenon: from 1987 to 2020, the annualized return of the Japanese stock market was 3.5%, while global stock index returns reached 7.2%. His second suggestion to his son can be described as violent—invest all available funds in global stock index funds.
"Buying index funds is not investing, it is buying a ticket to human economic progress." He explains, "When you drink Starbucks in Tokyo, fly on an Airbus in Paris, and use an Apple phone in Silicon Valley, the profits of these companies are all reflected in your fund's net value."
3. Trade like breathing
While serving as chief economist at UFJ Research, Yamazaki developed complex timing models. But in the end, he told his son: redeem when you need money, add positions when you have money, and don't try to predict the market. "During the 2008 financial crisis, those who waited for the 'bottom' ended up buying halfway up the hill."
Three, the anti-human path to financial freedom
When Yamazaki was an investment advisor at Meiji Life, he discovered a startling rule: account returns are inversely proportional to trading frequency. His advice to his son is filled with philosophical meaning: "Treat investment like a fixed deposit and treat volatility like a weather forecast."
▶ The 'sensory training' of youth
"What does a 30% fluctuation in your account at 25 mean? You might get a 50% salary increase by switching jobs, or a breakup could affect your work efficiency for three months. The real risk is never in the account."
▶ The 'wealth immunity' of middle age
"When you are 50, a 1/3 reduction in your account may exceed your annual salary. But don't forget, the premise for bearing this level of fluctuation is—you are already wealthier than 90% of people."
▶ The ultimate transformation of the concept of money
"Remember, the loss is a number, not money. During the Great Depression in 1929, those who held stocks ultimately became winners. Because what is truly valuable is not paper money, but the ability of humans to create value."
Four, a wake-up call for modern financial management
Beware of all promises of 'excess returns'
"If someone could truly outperform the index consistently, he should be sitting on a private island counting money, not collecting your management fees."Credit card installment is the poison of wealth
"I always say when teaching: you can't marry someone you date with installment payments. It's not snobbery, it's seeing through the self-discipline behind money."Investing is disturbingly simple
"The more complex the strategy, the greater the space for commission harvesting. How many people's financial paths were cut off by a 0.2% management fee on global index funds?"
In the last chapter of the book, Yamazaki wrote: "What I leave you is not a financial method, but the courage to face money. When you can calmly view account fluctuations, you truly understand capitalism—it is merely a large game designed by smart people, and you now hold the player's manual."
The terminal wisdom of this financial veteran unexpectedly confirms Buffett's famous saying: "Through regular investment in index funds, an amateur investor who knows nothing can often outperform most professional investors." Perhaps the real key to wealth has never been in Wall Street's computers, but in everyone's struggle against greed and fear.
