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It's been a long time since Israel's investors were this frustrated. Between the heat waves of summer, the uncertainties plaguing the world markets and the absence of attractive alternatives, Israel's savers have been swarming - toward real estate.

Usually, one's choice of investment avenues is affected by two opposing emotions: fear of loss, and greed. Is the market rising? Greed takes the upper hand - or as it's known euphemistically, "appetite for risk." The market turns down? Savers hunker down in conservative assets and hope not to lose money.

But not this summer. Investors were on a wild roller-coaster ride in the last 12 months, with every possible alternative losing ground as last year closed, and then the steep upswing in the second quarter. They're emotionally spent. They don't want to second-guess the financial markets.

And for good reason. Not one single investment avenue, not one alternative, not one portfolio looks toothsome these days, not even the exotic ones. Investment advisers have no succor to offer the doubt-ridden savers: There's no consensus among the pros. There's nothing they can point to as a group and say, that's the next hot thing.

Let's start with stocks. They rose strongly all spring, fueled by gains on Wall Street. but the rally lost its momentum about three weeks ago. Since then, share prices have been hovering. Nobody's banking on another spurt.

That's because share prices aren't low any more. Equity analyst agree that even if the economies of the West resume growing next year, progress will be slow and hesitant. Some traders actively fear, even if the apprehension is not based on any actual data, that another downturn will arrive after the summer, as the overdone optimism that has gripped the markets in recent months vanishes.

The situation in the bond market is no better. Short-term bonds linked to the consumer price index are returning negative yields. Nobody's touching them with a barge-pole. Five-year bonds are returning pretty much nothing, while 10-year paper is offering miserable yields of 2.4%, after tax.

Some investors think the prices of linked bonds, even investment-grade corporate bonds, are a sort of bubble fated to lose air. That's because the spread between the short-term interest rate, 0.5%, and the pace of inflation, which is about 3%, has created negative real interest on the capital market. Granted, it's a bonanza for businesses (if they can borrow from the banks), but it's hell for savers.

What about commodities? Well, nobody actually invests in commodities. Only a few trade in gold and oil. Secondly, if you're thinking about it, note that commodity prices stopped rising when predictions of rapid economic recovery stopped making the rounds. All commodities promise these days is intense fluctuation with no clear direction, which is hardly balm for shattered nerves.

A lot of people are unhappily placing their money in cash deposits, fixed-income bond funds or makams (short-term Bank of Israel notes), taking comfort in the thought that at least they aren't losing money. In nominal terms, that may be true. But after adjusting for inflation, that's exactly wht they are doing.

The purchasing power of money fell by almost 1% in June, while cash deposits at the bank and 1-year makams generated a yield of 1%. Meanwhile, inflation expectations are running at about 2.5%. If you wait a year, you'll be able to buy less product for your money than you can today.

What's to be done?

Foreign investors, it seems, are impressed by the stability of the shekel and by yields on long-term, 10-year, fixed-income government bonds, which can reach 6.1%. They've been selling dollars on the forex market and using the shekels to buy these bonds. It's an appropriate investment for Israelis too. But there's also a fear of an inflationary outbreak everywhere in a year or two. If inflation rises to 5%-6%, as some economists predict, long-term fixed-income bonds will collapse.

Bemused by the options, some investors are simply not doing anything. They're suffering from a collective loss of vitality, that animal instinct that causes humans to pounce on opportunities and to flee danger. Others are simply consuming, as shown by the brisk sales at malls and the rising prices in the apparel sector.

Others haven't given up, and are finding their answer in the real estate market. They're buying apartments for investment. It turns out that this is the summer of buying properties for investment, as law offices writing the transaction contracts attest.

Is an apartment for investment in the greater Tel Aviv area such a great deal?

Not really. Typical returns on rental apartments in the country's center is about 4% in shekel terms (or in dollar terms. These days it's about the same). It is true that owning a single apartment spares the investor tax payments.

And that's it. The apartment generates lower returns than the net 5% you can get on 10-year fixed-income bonds.

But hey, you can't really compare the two. One is a dry-as-dust financial asset and the other is a "real asset, with four walls and a roof, that you can leave to the kids. And who knows, maybe one day you can sell it for a handsome capital gain.