Lights and Shadows of the Abraham & Co.


Sometimes, every Japanese knows something, which foreigners don’t know at all. The issue “Abraham & Co.” I try to mention now comes under this category.

Actucally, the case is extremely simple: The Abraham & Co. conducted by a young Japanese entrepreneur with a background of one of famous Japanese trading companies was officially warned by the Japanese financial authority, because of its allegedly violation of a financial regulation. The Abraham & Co. explains it merely gives advices to its retail clients, when they choose financial products. The point is the Abraham & Co. allegedly gets in fact a huge amount of kick back from funds and entities, which buy their financial products to the retail clients of the Abraham & Co. According to the authority, this conduct obiviously voilates the regulation because of lack of neutrality.

“You will be able to make 100 million yen in the future, when you begin to save 50 thousand yen from now”, says its famous advertisement you can find everywhere in the Japanese media. But let’s calm down and calculate it again. How long will you need to save 100 million yen, when you save only 50 thousand yen per month? The Abraham & Co. explains it all depends on how seriously you learn strength and weakness of each financial product. Of course, that’s true. However, I still wonder why I should not save the money directly in my deposit of banks even with historical low rates, but pay 5 thousand yen per month to the Abraham & Co.  My primitive instinct tells it seems there is something implausible in the above mentioned message of the Abrahams…

Besides such an ambiguity of the whold story, one thing is clear: We should appreciate the Abraham & Co. successfully draws the pension issue in the Japanese society into attention. While other financial institutions like megabanks keep the problem secret without exceptions, the Abrahams haven’t hesitated to make it public and advise especially the Japanese younger generations to think of the seriousness of this issue for them. The problem is only the way they pretend to help them.  In lack of neutrality between advisory and collaboration with sellers, the Abrahams can’t be capable of helping the “pensionless” generaions.  In fact, they are cruel wolves, which bite innocent retail investors in the financial market.

This case “Abraham & Co.” triggers off the typical tendency in the Japanese society that the people always try to avoid direct interface with investment and market. Instead, they continue to save the money in their deposits by saying, “This is the only way for our future.”

But such a huge amount of saving in Japan is used only for the purchase of unlimited volume of Japanese Goverment Bonds. Under this condition, how will you feel, if the Goverment of Japan will declare default in the near future? Now, you must say, “Don’t be stupid! Japan won’t go bankrupt!” However, as soon as the momentum of the truth on the Japanese govermental debt issue will come, maybe in the latter half of 2015, everyone will finally realize it’s not stupid to prepare for such a default of the Japanese.

What the Japanese ordinary people with “pensionless” future should do right now is to enhance its “information literacy” to tackle the financial capitalism. Only with such a skill, they can make correct desicion when they choose finnancial products, make profits of them and finally enable to build a pension by themselves. From my viewpoint, the information literacy consists of the following two elements: “open source intelligence” and “scenario making”. Next time, I’ll deepen the discussion on it.

Just before the climax of “default theater” in the US tomorrow, I just want to say the real problem lays not in the States but in Japan, where much more national wealth has been accumulated than in other western countries. Inspite of that, the Abraham & Co. allegedly advises its retail clients to invest abroad very, very enthusiastically. The true answer shoud be “Invest at first in Japan before its possible default in 2015/2016, and then relocate all the assets abroad just before the Japanese financial turmoil.” The important question is then whether the Abrahams really don’t know their advices are totally wrong. Now that the Japanse public is fully aware of their tactical maneuvers so far, they can’t follow the same business mode any more.

Wait and see what clever Mr. Takaoka, CEO of the Abrahams, will show us next.  But remember the history won’t repeat three times…

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