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1. Banks are better than hi-tech: In 2003, three years ago, FIBI was trading at a nadir of 1,230 points. FIBI is the parent of First International Bank, and banking whiz Zadik Bino bought it, thereby obtaining control of the bank.

Yesterday FIBI was trading at an all-time high of 7,100 points. The stock had risen 480% in the space of three years. That is nominal returns, but with figures like that, who cares. Average returns of more than 100% a year is an investor's fondest dream, including investors who choose the riskiest of stocks - hi-tech. FIBI is a bank, not a chancy little startup making something that few people understand.

True, three years ago FIBI was losing badly on its loans portfolio, the Safras were dying to dump it, and nobody was lining up to buy. It really did look like an unusually bad investment. It's no great trick to look back and whistle in awe.

But why not look at a more neutral point in time, five years ago, the start of 2001. At the time the banks and the Israeli economy as a whole were losing their allure, though nobody realized how bad things would get. Versus that relatively neutral point in time, FIBI stock doubled in value, returning 15% a year in nominal terms. Not bad at all.

Let's move on to Bank Hapoalim, which even at its lowest point in the last years, hadn't been losing pots of money. Nobody doubted its robustness. In the last five years Bank Hapoalim stock has multiplied itself by 2.7. From its nadir of three years ago it's multiplied itself by 4.5. Who needs hi-tech with bank stocks generating returns like that.

2. The market is capricious, which is also for the best: The volatility of bank stocks reminds us yet again that the stock market is a capricious place by nature, and one shouldn't be alarmed by that it. Granted, with hindsight it's hard to defend the low prices bank stocks reached in early 2003; perhaps the stock market was gripped by useless panic, and is feeling euphoric today.

In retrospect, one has to apologize to Amir Barnea, who was slammed for daring to evaluate the banks at high prices. But none of that matters. What matters is that people who did not balk at the capriciousness and exploited it in their favor, people who stuck by their investments in the long run, did beautifully.

3. Nobody can cow the banks, certainly not the regulators. The bank stocks are flying at all-time highs today - even Bino, known for buying on the cheap, agreed to pay a record 1.85 times shareholders equity for Bank Hapoalim's subsidiary Bank Otsar Hahayal, even though the most onerous reform in history is just starting to kick in. After twenty years of battle, the banks lost, and were forced to sell their most lucrative assets, their provident and mutual funds. What did that draconian imposition do to them? Lift them to new heights.

Why? Because the reform did them no harm. They did lose management fees, say an average of 0.8% for provident funds. But against that, they will be allowed to charge distribution and operating fees of about 0.35% on the entire market of provident funds, not only the ones they own. Their income from provident and mutual funds may be impaired a little, but they managed to sell these companies at top dollar, as though there was no future duty for these companies to pay fees at all.

Conclusion: Even when the regulators bare their fangs to the gums, it can't beat the banks. Apparently, nobody can. That's how it is when you sit in an uncompetitive sector that controls the entire economy.