Why do stock markets worldwide fall time and again? Because people sell all sorts of stocks. And why are they selling? Because they closely examined their savings and saw that stocks were the worst investment in the past decade, so they want to get rid of them at any cost; here and now, particularly in the face of grim predictions of recession. The electronic herd has changed course and is quickly rushing away from the markets, trampling anything that happens to be in its way.
Do you know those cases where everyone leaves the roulette table with a grim facial expression? This is what’s happening now. The deep secret has been exposed: Those who invested in a highly recommended US stock portfolio (or a British one, or a German one, or a Japanese one,) at the start of the decade lost 40% to 60% in real terms thus far.
Some stock markets dove deeper than others, while some stock markets somehow provided their investors with miniscule yield in real terms; for example, the Tel Aviv stock exchange. The index of the 100 leading stocks traded in Tel Aviv rose by an average rate of 1% a year since 2000. This is not the kind of yield people tend to boast of, particularly when taking into account the risk level.
This does not mean that one cannot make nice profits in the interim periods by buying and selling stocks. It is most certainly possible. In any roller coaster there is a drop that leads to a climb, and a climb that leads to a drop. Those in possession of brave hearts and deep pockets are able to take advantage of the oscillations and make a fortune. However, should one not disembark from the rollercoaster on time, the wealth that has been accumulated while climbing fades away on the way down. By the time you reach the final stop, nothing is left, with the exception of a headache, a stomachache, and shattered dreams. Those who bought stocks on Wall Street in 1929, at its peak, only got their money back in real terms in 1959.
There is a human tendency to always look for the buy guys who are apparently at fault for our losses; if only they are removed from the game, we shall all be making profits again. When the stock markets in the Far East collapsed in 1998, the blame was directed at decaying regimes and corrupt conglomerates. Meanwhile, the leaders of these regimes blamed international Jewish financiers. When the stock market plague reached New York a year later, new guilty parties were found: Financial math whizzes who deceived the markets. When technology stocks collapsed in 2001, venture capital funds were blamed for failing to restrain themselves.
Now, the new guilty parties are chosen from among the senior managers of financial firms who were granted high salaries and inflated benefits.
The truth is less conspiratorial-criminal, but deeper. There is no scheming body behind this and no bloodsuckers – and we, Jews, better be even more careful when it comes to collectively accusing one kind of economic elite or another. After all, those kinds of accusations (“parasitic Jewish bankers”) were utilized by anti-Semites for many years.
The free capitalistic stock market is by its very nature unstable, unpredictable, unrestrained, and therefore unsuitable for long-term savings. It becomes inflated every few years, and every few years the bubble bursts. In between, smalltime investors can turn into millionaires, and back into smalltime investors.
The rule is well known: When a smalltime investor falls off a plane in the middle of the night, only a bank can save him. When the bank falls off the plane in the middle of the night, only a government can save it. Fortunately, the Israeli government has a company known as “State of Israel Assets,” which operates under the Treasury’s auspices and still holds controlling stake in Bank Leumi as well as Bank Discount stocks. If necessary, this government company would be able to invest billions of shekels in boosting the banks’ capital.
The conservative American Administration showed that it is able to adopt very un-capitalistic (and unpopular) steps in order to pump fresh blood into the tainted monetary system. However, the government must not even think of intervening in the stock market. The stock markets will not see calm until the last of the suckers get out and make room for new ones.
Should the stock market’s unstable state make us feel as though the end of the world is near? Not at all. Even though the Tel Aviv stock exchange has reverted to its real value of nine years ago (the Tel Aviv 100 Index declined “only” to its July 2005 levels,) the Israeli economy did not face a setback.
Israel’s national product has grown by 40% since the start of the decade. The average standard of living went up by even more than that. Exports skyrocketed. We have no net foreign debts, while foreigners owe us tens of billions of dollars. The reputation of Israel’s technological know-how has taken over the globe. Moreover, the prices of oil and raw materials imported by Israel declined by 40% - a huge profit for Israel and a good medicine for curbing inflation.
So come on, people; forget about the stock market. Go for other things: Go for technology. Go for information. Go for initiative. Go for creative spirit. Go for brainpower. This is our competitive advantage. Those are our greatest assets. Life and death do not hinge on stocks; stock markets rise and fall, but a healthy economy stays.