Aaron Katsman
www.IsraelNewsletter.com

With Israel immersed in speculation whether PM Ehud Olmert  will be indicted on bribery charges, the question for investors is what the impact will be on the markets? While globally, financial markets hate uncertainty, and just the mention of a leader getting busted for being on the take, would send indices plunging, in Israel I would expect little fallout. Why? Because Israel goes through PM’s at a rate that makes Italy proud. I can’t remember the last PM to serve out his entire 4 year term. In addition, Olmert already has 4 investigations against him. Sorry to say, but Israeli’s have become accustomed to scandal, and coalition uncertainty.

In this particular case, while the local Tel-Aviv Exchange may fall somewhat when it opens for trading on Sunday, I would expect the reaction to be short lived. Keep in mind that opposition leader, and former PM and Finance Minister, Benjamin Netanyahu is a market favorite. He was instrumental in turning Israel around economically, and basically saved the country from bankruptcy, earlier this decade.

Israeli stocks that trade in the US, should be even less effected, as most are export driven, and make most of their sales outside of Israel.

Keep tuned into IOI, as we will track the scandal and report on the impact that any new allegations will have on Israeli stocks.

Disclosure: Author’s fund has no position in any other stock mentioned as of 5/9/08.

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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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Aaron Katsman
www.IsraelNewsletter.com

In today’s issue of the Israeli financial paper Globes, Merav Ankori, has an interesting article on how the US Army is looking to invest in Israeli water technology. Apparently the US Army invests sizable amounts of money in private equity, and one of the funds, Onpoint Technologies, is managed by Arsenal Venture Partners.  Christopher Fountas, Arsenal managing partner and Onpoint director, is in Israel looking for local water technology companies.

In an interview with Globes, Fountas said, “We manage investments in technologies for the US Army to meet needs that arise in wartime, such as during operations in Iraq, and for the government and industrial markets. We’ve come to Israel with the understanding that it’s a global leader in water technologies.”

While it’s true that Israel is a global leader in exporting all kinds of water technologies to the world, it’s ironic that Israel is facing a water shortage. With below average rain over the last few winters, the country’s main water sources are at dangerously low levels. For Israelis the summer is sure to bring calls for water conservation. Why? Because of bureaucracy. Israel has done next to nothing to shore up its’ own water supply. With all the technological advances including desalination and drip irrigation, Israeli bureaucrats and legislators, as usual, were asleep at the wheel. While Israeli companies were out making millions of dollars selling their technology abroad, a crisis developed locally.

At least US soldiers will be drinking clean water. L’chaim!

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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 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

It wasn’t long ago that the flag-bearer for corporate social responsibility, Ben and Jerry’s Ice Cream, went looking for a CEO. Problem was they couldn’t find a good one.

Why? Who wouldn’t want to be CEO of such a large and well-known company?

The problem was that they had made a stipulation in the terms that they were going to offer the candidate. They had a rule during the early 1980s that no employee could make more than five times what the lowest-paid worker was paid. That capped CEO pay at $81,000. What kind of well-qualified candidate would take a CEO position for that salary? No one. That’s why in ‘94 they scrapped that rule so that they could go out and get a good CEO.

Ever the demagogue, Israeli MK Shelly Yechimovich has drafted legislation limiting CEO pay to 50 times that of the lowest paid employee. She is doing this in the name of “social equality.” How will this create equality, Shelly? It won’t improve the financial lot of the lower paid employees; in fact, it will hurt them the most. How? Because they won’t get hired. If there is no financial incentive for a CEO to do a good job, then he won’t and business will stagnate, and there will be no expansion, i.e. no one new will get hired.

Executives have much more of an impact on the business than workers making the minimum wage. In fact, many times CEOs are actually the owners of the business, meaning that that have all the risk associated with failure as well. It’s a basic rule of investing: Risk vs. Reward. The more you have on the line, the more you should be able to make.

Already facing a “brain drain” with the best and brightest Israeli academics leaving Israel for greener pastures, if this legislation became law, the same thing would happen in business, something Israel can’t afford.

It’s important to note that MK Yechimovich has no business experience. She was a journalist and gained fame with a political radio show. What gives her the authority to tell us how to run a business?

Shelly, if you really want to help, stop meddling in our lives, and let us live freely, without government intrusion into every facet of society.

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Aaron Katsman is the 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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