I’d like to point out a couple of very interesting reads that I stumbled upon today. the first was actually written by my brother, Abe. It appears in the Jpost In the article Katsman compares the current situation in Iraq to that of Vietnam. Politically, similarities abound. “Some quick history: Finally concluding that they could not defeat the American-backed Republic of South Vietnam, the communist North Vietnam signed the Paris Agreement in January, 1973, which called for cessation of attacks by the North and recognition of Saigon’s fragile democratic government. America withdrew its troops, but continued air support and arms to the anticommunist, increasingly stable South Vietnamese, as well as to its neighboring anticommunist Republic of Cambodia.

But a hated President Nixon resigned in scandal, and his obsessive, personally vindictive critics then elected to Congress in 1974 could not bear to support his arguably significant foreign policy success in a war they had vehemently opposed. Within months, Congressional Democrats proceeded to kick the legs out from under the South Vietnamese, withdrawing all American personnel, and cutting off all aid and arms - leaving all of Indochina to the tender mercies of the communist forces.”

Obama’s cut and run strategy could potentially cause bedlam. Sounds familiar. We are  supposed to learn from history, no?

In an article in the online Wall Street Journal,  Steven G. Calabresi has a very interesting post on Obama’s judicial philosophy. In an issue that has gained almost zero exposure during the election, Calabresi points out just how far to left Obama is vis-a-vis his judicial philosophy, and with many potential Supreme Court openings, he could move the court way to left for years to come.

“Speaking in July 2007 at a conference of Planned Parenthood, he said: “[W]e need somebody who’s got the heart, the empathy, to recognize what it’s like to be a young teenage mom. The empathy to understand what it’s like to be poor, or African-American, or gay, or disabled, or old. And that’s the criteria by which I’m going to be selecting my judges.”

Wow. Is Obama advocating that we should ignore the law, and rule in favor of those who need empathy?

I’d love to hear an Obama surrogate explain this one.

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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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The recent banking crisis has hurt a lot of people, do doubt.  While stocks have plummeted and firms gone under, there has been a bright side for very conservative investors: lots of CDs (certificates of deposit) to choose from.  While rates have varied wildly, as banks need short term deposit money, they’ve become quite aggressive and prolific in their borrowing from account holders.  As Goldman Sachs and Morgan Stanley morph into deposit institutions and race to gather assets to shore up their deposit base, they are quickly offering CDs in volume to attract new customers.

We’ve heard of aggressive teaser rates at local banks trying to bring in new customers by offering more than a new toaster.  An interesting offshoot of this competitiveness is manifesting itself in new internet distribution models.  There seems to be a buzz surrounding one of these companies, MoneyAisle.

Like other Internet business models, MoneyAisle turns a traditional model on its head and gets companies competing for your business.  In this case, banks bid via live auctions for your business.  Much like LendingTree, which does something similar for mortgages, MoneyAisle allows a consumer with investable funds to enter deposit terms and state of residence (it matters for CDs, as some are not available in certain states).  In a few minutes, that information is put out to auction and you’re connected with the winning bidder bank and hopefully, get a better rate on better terms than you would have received scoping out the local shopping strip.

Right now, MoneyAisle works its magic for 2 products: Bank CDs and Savings accounts.  These are typically easy-to-compare and standardized products, so it seems to work well.  It will be interesting if MoneyAisle branches out to other types of investments (I guess structured products could fit into this model, as well).

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Following a pattern seen in markets all over the world, Israeli mutual fund investors are running for the doors.  Skittish Israeli investors are expected to have withdrawn over 5 billion NIS from Israeli mutual fund companies just in the month of October.  Investors have withdrawn $6.47 billion in the U.S. just this past week alone.

I’m having trouble locating the overall size of the Israeli mutual fund industry from an assets under management (AUM) perspective, but given its relative size, I have a feeling that this a relatively big number.  The same Globes article linked to above said that withdrawals were even higher in January of this year, probably after clients received their yearly statements for 2007.

Israeli investors are finicky and like many investors globally, tend to follow the hot money.  There is less of a buy-and-hold culture here in a country of investors who would rather find a better producing asset (typically, real estate) than wait as we sort out the mess of the market.

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With the stock market getting pummeled investors have run for cover. Panicking after losing significant chunks of their savings, investors are looking for any reason to jump back into the stock market. Unfortunately instead of rewarding investors, companies are trying to fool them. As if we haven’t seen enough corporate irresponsibility, the new trend of corporate stock buybacks artificially increases EPS, thus fooling investors into thinking the company is actually growing.

It’s funny that this trend towards buybacks has taken hold as Barack Obama has surged in the polls. Much like Obama’s economic policy, share buybacks are cosmetic solutions but often nothing concrete to reward investors. Sort of like running a campaign on hope and change!

Enough trickery, investors have suffered enough. It’s time to start rewarding investors. How? Remember that old time word they used to use,  ‘Dividend.’

I know that share buybacks are ‘tax efficient’ as well as they fatten EPS numbers, but how about doing something radical for investors?  Something like paying a dividend, or investing in growing the company. Doesn’t a stock buyback just mean that the company has nothing better to do with their money? Give some of your profits back to shareholders. Hey, there is an idea!

For a great analysis of the pros and cons of buybacks, check out economist Stefan Karlsson’s blog.

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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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