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Here we go.

Even though my columns peering into the future have proven pretty accurate with hindsight, I tackle the mission feeling somewhat queasy this year. Not because of the elections around the corner, or because of the escalation in regional hostilities. No, the year 2006 is horribly hard to predict because of the unprecedented and terrific influence the world economy will have on us.

l 2006 will be the year of the Israeli economy. Our domestic economic parameters will remain stable; most of the shocks will come from the outside. The imbalance of the American economy, the prices of commodities and oil, the persisting growth of the technology business and investments in emerging markets - these are the factors that will determine the direction and pace of the Israeli economy.

During the first half of 2006, massive foreign investment will continue to pour in, while Israelis continue to invest massively elsewhere. In the second half, a nasty surprise in one of the markets could shock markets in Israel and the world.

l Problems in America will continue to hang over the American economy and the world in 2006 too - its budget and trade deficits, its slump in saving and the real estate bubble. The world economy surprised pundits on the upside in the last two years; the tremendous surpluses of money and low interest rates precluded recession, and the flood of cheap goods from China punctured inflationary pressures and sharp interest rate hikes. But with oil that high and savings that low in the U.S., the dependence on cheap money has made the world economy and currency markets vulnerable.

Investors in the west starved for returns and, disappointed by Wall Street, will continue to increase the risk of their portfolios. They will invest more and more in emerging markets and global hedge funds, which could prepare the groundwork for the next bubble.

l Despite the elections and the political uncertainty, macroeconomic stability will be preserved thanks to a cap on spending and extra income from more privatizations. The company's net offerings on the local capital market will remain low and the main threat to short- and long-term interest rates will be the international markets.

l After three years of high returns from most investment vehicles, it will be hard to eke out returns without taking great risks in 2006. The mad race for yields will seduce many a mutual fund manager into riskier adventures than we've been accustomed to see. During 2006, some horrible scandal at a broker or investment management company will break and the Finance Ministry will hurriedly suggest establishing an authority to supervise the capital market.

l The reverberations of the Bachar reform will continue well into 2006. Brokerages and investment funds will continue to change hands, new partnerships will be forged, and foreign investors will continue to come in.

l The Internet bubble will come back - big time. It won't be like the 2000 bubble because this time the activity on line is real, not only forecasted, but a bubble it will be. Ad agencies, media outlets and the like that were burned the last time around will rediscover Internet's charms, just as prices climb sky-high.

"Internet" will continue to star in the business pages and Google will remain the hottest company in the sphere. Google's massive entry into Israel will send ripples through the local marketplace and prove how backward our local network is.

l Premium real estate prices will rise after seven lean years, and for the first time in four years, the office space market will show buds of recovery. The first REITs will float on the Tel Aviv Stock Exchange and join the wave of new-fangled investment instruments washing over the market in the post-Bachar era.

l The euphoria of 2000 will return to the high-tech sphere. Demand for workers will grow. The big Israeli tech companies that sat tight on their cash in the last few years will start buying Israeli and other companies.

l The Israeli oligarchs who grew immensely rich in the last two years will continue to tighten their grip on the Israeli marketplace, to the general displeasure. High-tech millionaires will multiply but won't make local investment this year either. It's going to be the same old names - Nochi Dankner, Yitzhak Tshuva, Lev Leviev and Dudi Wiessman buying up every company offered for sale.

l On December 30, 2006, most forecasters will look back and thank heaven they didn't bet the house on their projections.