Trying to Time Markets

Trying to Time Markets



Director, Buy a Piece of Israel
Founder, L'Ma'an Ha'am

While you can watch and listen to various experts and gurus predicting various markets and market and economic indicators, the truth be told, this is a very risky way of making investment decisions.

Say for example you purchase 10 or 15  year bonds thinking that the worst of the interest rate hikes are behind us and the momentum for the long term will be lower rates.  What happens if for example this prediction is wrong and interest rates go up another 2-3 percentage points? This could happen in the United States (and it may not) if the US deficit gets out of control while at the same time nasty competitors such as the Communist Government of China become stronger and start to chip away further at US dominance.  The dollar in this situation would be weakened and interest rates would probably rise as US credit ratings would be downgraded.  This would leave you with the option of selling bonds at a loss or waiting until maturity.

The focus for individual investors always should be based on personal investment objectives and fundamentals.  A pensioner’s objectives with bonds should be income and preservation of capital.  If this investor doesn’t need to draw on the capital and is comfortable tying up his/her money in a 10 or 15 year bond that today is paying a rate of interest that is acceptable for those upcoming years, and that the bond is secure rated AA or AAA, this should be considered an appropriate investment for this particular investor.  This type of investor should not be trading in bonds or trying to time the bond market.

The same fundamentals hold true for stocks (equities).  Day traders and short term option investors can be very skilled, but this isn’t truly investing.  Owning shares in a company that has low debt, good management, consistent increases in sales as well as annual earnings, and isn’t threatened by its industry becoming extinct, is the type of company to put in one’s capital appreciation portfolio, which needs to be monitored for any significant changes that would change the criteria of owning such a company.  Looking forward, when would be the right time to sell?  When you would look at all the fundamentals of the company and objectively not purchase any more if funds were available.  With these types of investments, short term changes in prices should not be part of the criteria of deciding to divest of this investment.  Again it’s the fundamentals.

Israeli real estate, in this case private land, historically has risen in price almost uninterrupted since the founding of the State of Israel.  With only 7% of the land in the State being private and a native population that is young and growing from natural growth (and soon lots of immigration), we are talking about assets with a very limited overall supply combined with an every growing demand.  The Shekel went down and the beginning of the war had a negative impact? True.  Yet the perception of stability is coming back and with that the Shekel.  It’s not a fluke that for some 20 years the Shekel beat out the other Western currencies.  The Shekel has legs and to bet against it for the long term, is to ignore the fundamentals and future growth rate of the Israeli economy.  

In the photos above, we visited this week with the law of offices of Lankri and associates in Tiberias who serve a lot of our clients with registering their real estate purchases.  As recently as a month ago they had no work.  This week they are already back logged.  Why?  Because Israeli real estate has all the fundamentals for long term price appreciation based on supply and demand.

In conclusion, the smart money thinks long.  Israel the eternal home of the Jewish People with a young and growing population is an expensive real estate market today that in 20 years looking back will probably seem awfully cheap.  

For more information on how you can invest Israel’s real estate market, contact us.


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Trying to Time Markets

Trying to Time Markets

While you can watch and listen to various experts and gurus predicting various markets and market and economic indicators, the truth be told, this is

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