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The Israeli public has been snubbing the market. For ten years now people keep promising the public will jump back in any moment, and for ten years it has remained stubbornly aloof.

So says Doron Tsur, the only Israeli analyst to gain the label "market strategist," and he doesn't see the public leopard changing its spots in 2004.

Shares are highly tempting after a 50 percent climb in 2003, and bank deposits are not tempting at all, given the steep drop in interest rates and the tax on capital gains. But that doesn't mean the public is about to get into the market - quite the contrary.

The public was wise to ignore expert advice and to avoid stocks like the plague during the last decade, says Tsur. At almost every point, investment in conservative assets, mainly shekel channels, was better than stocks. Burnt twice in 1983 and 1994, the public had no intention of being burned again and stood firm against the siren call of the stock market. It did well too - even if the steep gains of 2003 are factored in, long-term investment in the shekel was far better.

Yet that's the past that can say nothing of the future. The public could well succumb to market temptations in 2004. Israeli interest rates are their lowest in ten years and even after the gains, share prices are not considered excessive. Stocks may be considered fully priced, depending on one's growth forecasts, but few think them expensive.

Alluring indeed, but there are very worrisome risks. One is interest, a risk built into exchange rates. The hope that the Bank of Israel will continue to lower interest rates as the recession rages on goes hand in hand with concern that the cuts will undermine the shekel.

As things are, the interest spread between long-term U.S. and Israeli rates has shrunk to a mere 3 percent, which is considered small, given the difference in the two countries' risk premiums. Interest cuts may stimulate the economy much less than people hope, if the central bank decelerates its pace to protect the shekel.

A much greater threat is wheelers, dealers and manipulators. Even the mighty Bank Hapoalim needed one to machete through the weeds of bureaucracy, we learned this week. If even the biggest bank needs to pay someone to access his contacts just to get rights it already was entitled to under the law, that says bad things about Israel and investment in Israel.

Even without that scandalous affair, Israel's morale was low enough, given the never-ending fight with the Palestinians and equally ceaseless malpractice in the various arms of government. That is hardly a suitable basis for the public to sing yippee! and stampede to the market in droves.