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1. Did you miss November? Did you miss the first four trading days of December? Too bad. You've missed two-thirds of the Tel Aviv Stock Exchange's annual yield for 2004.

What went wrong? You thought you knew when to get in, and out? Then you forgot the iron rule of stock markets: gains happen in spikes. Sometimes returns of a year, or two or three get crammed into the space of a month or two. If you want to earn from stocks over time, you have to stay in.

Who can afford to risk slipping in and out? Only the pros, of course, the ones generating 20 percent to 30 percent a year on the stock market over decades. Who are these pros? Well, there are only about 20 or 30 worldwide. Are you one of them? Probably not.

2. The question everybody is asking is, when will the public come into stocks? Who's this "everybody" asking? The ones already inside, of course. They got in hoping the herd would stampede in their wake, buying their shares for top shekel. That is how it always worked, so why wouldn't it this year?

Thing is, the public was already inside. The Bank of Israel hasn't published its December data for the public's financial assets yet, but a quick analysis of the October figures tells the story.

The public portfolio totals NIS 1.45 trillion, of which NIS 340 billion are invested in stocks in Tel Aviv, and NIS 35 billion in foreign stocks. Meaning, 25 percent of the public portfolio is already invested in stocks.

For the sake of comparison, in the record year of 2000, the figure was 24 percent, but then 5 percent of the total investment was in inflated high-tech stocks on Wall Street. In 2002, the lowest year, the component of stocks in the public portfolio shrank to 15 percent.

We must conclude that the public is inside. How? Did it buy shares? Not directly, but the provident funds and mutuals and training funds and insurance policies in which it has holdings bought shares. They have been consistently increasing the stock component in their portfolios.

3. He's got it, Bibi. He's got the luck, the timing and of course, the act. As the stock market reached record heights, distracting our attention from the signs of economic slowdown, there he was on the dais at the business conference, being crowned with verbal garlands.

Mr Finance Minister, the stock market is rising, but not because of you. You know full well that the Finance Ministry has been weakened for months, that the special spirit you imbued in your first year is waning. You know the 2005 budget is threatened, and that this year you managed to meet the deficit targets mainly because costs ran lower than expected. You know perfectly well that the two greatest reforms remain undone. You can't sell the Great Budget Cuts of 2003 and the pension reform again and again; you need fresh achievements, not ones that make headlines but ones that create genuine change.

4. So why is the stock market rising? Because Wall Street is. Because of the fresh winds of stability blowing through the Middle East. Because the Bank of Israel isn't raring to raise interest rates every time some threat appears on the distant horizon.

In short, because when we combine stability, low inflation and low interest rates, we find that the foreign markets are a lot more expensive.

5. What could rain on the parade? A resumption of the intifada? The government's collapse? Death of the reforms? Breaking the budget dam? Yes, all the above, but that's always true. Nor are they the biggest threats to the TASE. The biggest threats are the ones we don't see. As jet pilots say, the one you don't see is the one who shoots you down.

There is one enormous threat to which Tel Aviv seems oblivious: the tremendous leverage of the American economy. Households are massively overextended there, so is the government and the nation is running an elephantine trade deficit financed by foreign investments, mainly by central banks worldwide.

In short, Americans are borrowing massively to finance their standard of living. And the Japanese and Chinese are footing the bill.

That could end in a number of ways. One is a sharp interest rate hike in the U.S., leading to sharp rate hikes and economic slowdowns everywhere else. Who knows if that will happen or when. Maybe those 20 or 30 pros we mentioned above have some idea. We don't.