Cheesy investments on Tel Aviv Stock Exchange

Last week, I reread the 1990s classic: “who moved my cheese”. Four mice grapple with a new situation; having been used to a ready supply of quality cheese, the source dried up and each one had to work out what to do next.

Ever since the beginning of the credit crunch, I have been singing the praises of the Israeli economy and its stock market. The former is heading for over 3% growth this year. And investors have seen the main index climb over 110%, reaching a new record high this month. In May, the Tel Aviv Stock Exchange (TASE) moves over to the group of developed countries.

The Israeli economy is doing well. Many of the correct economic fundamentals are in place. Even interest rates are gradually returning to realistic levels. Yet, in the same breath, I must repeat what I have mentioned back in November 2009. The new status for TASE will not automatically bring an immediate bonus to holders of Israeli stocks and shares.

Until now, Israel shares have been a great bet if you wanted to hold shares in the group of emerging economies. Now Israeli stocks are competing with the big boys, and it represents a much small portion of a signficantly bigger pie. To quote a recent analysis:

Market sources have long warned of an exodus by foreign investors from the TASE and subsequent delays by new investors not rushing to get in after the upgrade on May 26.

(Meanwhile…) local investors are buying. Foreign investors are selling huge quantities and the public is buying, but this can’t go on, and at some point it will come crashing down. Everyone in the market knows this and they’re talking about it behind the scenes, but they’re keeping quiet outside.”

What is called for is not panic, but a reality check – an adjusted approach. Anything wrong with that simple advice?

 Go back to Dr Spencer Johnson, the author of the cheesy book. His preface includes the truism: “The best laid schemes o’ mice and men often go astray”…….written 250 years ago by Robert Burns.

How long does it take for people to listen, and learn?

Explore posts in the same categories: Business, Israel

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