Looking to take advantage of the depressed global banking industry, it appears that the Israeli Bank Hapoalim, is looking to make an acquisition of a private bank in Switzerland.

According to Globes: “Bank Hapoalim (TASE: POLI; LSE:80OA) is considering expanding its activity in Switzerland by acquiring another local bank, and has allocated $500 million for this purpose. Bank Hapoalim wants a bank that specializes in private banking. Bank Hapoalim wants to exploit the global banking crisis and falling bank prices to expand its current Swiss banking business by absorbing an acquired bank. It has already conducted a preliminary survey of possible acquisition targets.”

I think this is a great strategy. Trying to expand by buying cheap assets is a great way to do it. Small, niche private banks are quite profitable and will add to Bank Hapoalim’s profitibilty, as well as help the bank diversify away from the Israeli economy.

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We all have seen the headlines: “The easy way to make millions”, or “the quick way to instant wealth”, we are constantly being bombarded with advertisements promising us the world without having to do any work.

Instant Gratification

In today’s western society we are constantly having the notion of instant gratification being reinforced. If it’s our increasing dependence on fast food, to the notion of getting rich quick, we have lost the virtue of patience. Last week I met with someone, who wanted to open an account, and he said that he wanted to only invest, if I could “guarantee” that he will double his money in 3 years. I told him that no responsible professional advisor would ever make such a guarantee, and he laughed and said that he has already spoken to three other advisors, and they said, “ no problem. We can double your money in three years.”

Buyer Beware

The local media is filled with advertisements pitching various real estate opportunities both in Israel and abroad. They often make very seductive claims, of minimal investment and returns over 200% for 3 years, or a “guarantee” of such and such a return. How does one know if this is legitimate or not. Rule number one: If it sounds too good to be true, it probably is. Rule number two: read the fine print. Often times the small print on the bottom of the advertisement, makes it very clear that the “Guarantee” comes with many strings attached, and in fact there is a reasonable chance that you can indeed lose money. Rule number three; Ask detailed questions. Don’t let the salesman off the hook. Ask pointed and specific questions to get a better understanding of the investment. Ask about the risks. If the answer is,” there are no risks,” or lip service is paid to explaining the risks, there is a good chance that you are not getting the full information about the investment, and you should think twice about investing.

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I clearly remember Israeli industrialists begging for the Bank of Israel to intervene in forex markets in order to pick up exports. We were told that a strong shekel caused a loss of over $2 billion in lost business, because Israeli goods were more expensive abroad. Industrialists got their wish and there was central bank intervention and not only that but the USD made a big move against most major currencies. Sounds like great news for exporters, right?

Wrong. Globes is reporting that Israeli exports actually fell in October, the first drop in 5 years. ” exports of goods (excluding diamonds) of 3.4% and an annualized increase in imports of goods of 2.8% in August-October 2008, the Central Bureau of Statistics reported today. This is the first drop in exports in five years, although there have been slowdowns in the rate of growth.”

If i am not mistaken, the Shekel has been strengthening over the last 5 years. That would mean that the industrialists have it backwards. Wouldn’t be the first time. I think( I remember hearing this but don’t quote me) former president Ronald Reagan once said something like ” a strong currency is the sign of a strong country and strong economy.”

Maybe the industrialists should concentrate on making better products at cheaper prices. I bet if they can compete on quality and price, then their sales will increase regardless of currency fluctuations.

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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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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.

Please see our Disclaimer HERE.

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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