Aaron Katsman
www.IsraelNewsletter.com  

With 2007 about to finish, it’s time to look forward to 2008. Here are a few of my predictions for the new year. Before I start I just want to make clear I don’t expect anyone to hold me to what I say, but of course if I actually get something right, rest assured I will let you know about it.

1- At some point during the year the price of crude oil will trade below $75 a barrel. This will be great for the consumer as they save a lot of money at the pump, and will cause a crashing of many alternative energy stocks, especially the Solar plays like First Solar(FSLR).

2- There will be no recession in the US economy, despite the best efforts of the media to “will” one. While the economy should slow somewhat during the first half of ‘08, the economy will grow enough to stay out of a recession, and the second half of ‘08 should bring back 4+% GDP growth.

3- The Rudy Giuliani/John McCain ticket will surprisingly win the US presidential election. With Republicans given virtually no chance to hang on to the White House, with a strong economy and the continued  new-found success of the war in Iraq, they not only win but win back control of Congress as well.

4- Late in the summer the current Israeli government headed by PM Ehud Olmert will fall, and new elections will be called.

5- Picking up from a lackluster ‘07, with regard to M&A of Israeli publicly traded companies in the US, ‘08 will have no less than 6 major deals. Look for Gilat(GILT), Retalix(RTLX), Commtouch(CTCH), Comverse Technology(CMVT.pk), CEVA(CEVA), and Fundtech(FNDT) to be acquired.

6- The earth will cool, there will be no global warming.

7- After completing an undefeated season and winning the Super Bowl, the New England Patriots’ winning streak is snapped in week 3 of the ‘08 NFL season.

8- As much as I would like, most of these predictions will not come true.

We should all have a year of health, and happiness.

Disclosure: Author’s fund holds a position in GILT,CMVT.pk,CTCH,RTLX and FNDT. He has no position in any other stock mentioned as of 12/31/07.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter.  Stay ahead of the game and make smart decisions in Israel stocks.  Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com  

As if we forgot that we are living in a dangerous world, today’s newsthat Pakistani opposition leader Benazir Bhutto was killed in a terrorist attack, has reminded the world, and the Democratic party, just how dangerous a world we live in. We are once again reminded that there is a very large movement of individuals bent on the destruction of the west, along with the democratic ideals that the west represents. For some, watching extremists burn the flag of the USA along with that of Israel on the nightly news is meaningless. Many of these people feel that it’s President Bush’s fault we are not well liked. Today’s incident shows that the deep rooted hatred has nothing to do with the current US president, rather for the ideas that the US was founded on. That is what is not well liked by these extremist elements.

With this grim reminder of the dangers still common in the world, I think this means a renewed focus on security stocks. When speaking about security no conversation is complete without looking at Israel. The undisputed leader in security technology, Israel’s security establishment gained fame because of the reign of terror that the country has faced for decades. Nice Systems(NASDAQ:NICE) is one such company. The stock is bucking today’s downward market pressure and is gaining more than 1.5%. Nice is a security company that specializes in two markets: Security and Call Centers. Its security solution empowers security personnel to detect, prevent, and respond to threats in real-time. It also allows them to investigate, and reconstruct criminal and security cases using video surveillance and control services, incident monitoring, and reconstruction solutions. NICE is the market leader in providing fast and efficient solutions for the capture, storage, retrieval and analysis of customer interactions for contact centers, and the enterprise. Nice will be playing an active role in the upcoming summer Olympics in Beijing.

As long as there are bad guys out there they will be a need for a company like Nice.

Disclosure: Author’s fund holds a position in NICE and is long the stock as of 12/26/07.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter.  Stay ahead of the game and make smart decisions in Israel stocks.  Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com 

With a new round of rumors swirling around Retalix(RTLX) and a possible buyout could the 3rd time finally be a charm? For a company that every few months gets mentioned as a possible takeover target, you would think that the stock would be doing much better than it is.

Regardless of an M&A the company, down in the $16.50 range actually looks attractive. The recent management shakeup appears to be an effort at re-energizing the company,bringing in younger, fresher blood. The company is on pace to have record revenues. Commenting on last quarter’s numbers, Chairman Barry Shaked concluded, “We are having a record year in sales, and for FY 2007 we expect our total revenues to be above the midpoint of the range of our guidance. We feel that we can still achieve net income at the low end of the range through a few deals that we are working on. The unchanged business fundamentals, the strong demand for our products and our long-term customer relationships support our estimates.”

Regardless of an M&A this is beginning to look like an interesting turnaround story. 

Disclosure: Author’s fund holds a position in RTLX and is long the stock as of 12/26/07.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter.  Stay ahead of the game and make smart decisions in Israel stocks.  Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com 

The Bank of Israel  has raised interest rates by 25 basis points to 4.25%. The central bank cited the higher than expected 0.4% rise in the November Consumer Price Index (CPI). With import prices, especially for food, soaring it appears that inflation has become a worry for the local economy. This could dampen potential ’08 stock market gains, as it may take a big bite out of domestic consumption. Many analysts point to continued increasing consumption by the consumer as a major driving force behind both strong economic growth and stock exchange gains for 2008. With inflation bubbling this could be very troubling.

For local Israeli investors looking how to invest to protect themselves against this inflation, they should consider Israeli government CPI linked bonds.  

In a disturbing aside, the Bank of Israel added,”The government’s budget surplus since the beginning of the year reached NIS 7.7 billion,” with all due respect what is the government doing with such a big budget surplus. Could it be that the government over-taxed the citizenry? The government isn’t a ”for-profit” organization, and as such, need or should be required, to refund all of that surplus ASAP, to the rightful owners…..the citizens of Israel.

Disclosure: Author’s fund holds no position in any stock mentioned as of 12/21/07.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter.  Stay ahead of the game and make smart decisions in Israel stocks.  Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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