Do We Really Make Our Own Decisions?

Koby at Seeking Alpha forwarded me this fascinating video of Dan Ariely's talk at the TED conference this year. I highly recommend watching it.

Tel Aviv Stock Exchange

Esther Levanon, CEO of the Tel Aviv Stock Exchange, gave the below interview on CNBC this morning. A few comments:

1. If Israel wants to attract serious foreign investment and liquidity to the TASE, it needs to get the liquidity up in the big companies and that means loosening the grip of the "Tycoons" on the big companies. We need a carrot approach that gives tax relief to tightly controlled companies to sell their stock to the public. This would also help retire a lot of the debt they have on the books.

2. Getting more liquidity on the TASE and the deal with the NYSE could possibly help Israel's tech companies raise later stage funding for which there is a severe shortage in Israel. We need local liquidity options to jump start that funding base.

3. While Mrs. Levanon has done a much better job than any of her predecessors in getting the word out on Israeli financial markets and in expanding their global reach (I have now seen her twice on CNBC and interviews in the written press), we need to get her some help and training in English. Like many Israeli spokesman from the Foreign Ministry down, Press training and English Language skills are sorely lacking. 

You can see some of my stocktalks and posts on Israeli companies on my page on Seeking Alpha

Kiteboarding VCs and Entrepreneurs

Here is a shout out to my partner Arad,  and CEO of Tunewiki Rani Cohen, Kitesurfers extraordinaire and great partners!

**Update - My Partner Arad sent over two pictures of himself KiteBoarding!

*** Update 2 - Dave Yovanno, CEO of Gigya, Sent over a video and picture of Himself Kiteboarding nearly horizontal with a big wake and Rani Cohen, CEO of Tunewiki, sent one of himself airborne.

Dave Y. Emma Wood Kiteboarding from 1wave on Vimeo.

Stanley Fisher's Dollar/Shekel Dilemma

As the Dollar weakened over the last 2 weeks against the Israeli Shekel, per my prediction, Governor of the Bank of Israel Stanley Fisher is up against a difficult dilemma. Fisher managed to lower the value of the shekel by dropping interest rates and buying up dollars on the open market. But he is running out of choices because interest rates are already very low and I do not think he wants to get stuck holding a currency (Dollar) that is rapidly devaluing due to US  inflation fears. The Chinese are facing this dilemma NOW. Printing shekels like the US has done to the dollar is also not an option because the tiny Israeli economy cannot bear 80's style inflation.

As an export economy, Israel depends on its goods andservices being competitive in quality and price in other markets, especially the USA. Furthermore, in tech land, Israeli R&D struggles to be cost-competitive in global markets when the shekel/dollar exchange rate drops much below 4:1 (see chart below). I don't have any bright ideas for Governor Fisher but I do have some suggestions for start ups and Israeli traded public companies. Some of these are rehashed:

1. Plan your budget conservatively. Project a 3.5:1 Shekel:Dollar exchange rate for the rest of the year.
2. If you are a start up or a public company then convert dollars to shekels to cover at least 12 months of shekel-denominated operation costs. There is no reason for you to take currency risk and I imagine that most of you are budgeted at somewhere less than 4:1 which is roughly where the exchange rate is now as it heads south.
3. If you are in investor in an public Israeli company with large shekel exposure (full disclosure: I am invested in Publicly traded MAIL and Babylon) then see what that company's currency hedging policies are.
4. Already create a plan on how you make more with less. As your R&D budget increases in dollar terms, you may be forced to trim staff.

5. Target some non-US markets with your goods on services. This is a good time to be targeting China and India if you can. Those revenues will be more valuable in Shekel terms over the next period of US inflation.

6. Think about putting at least some of your cash reserves in TIPS, which are inflation protected.

None of these are a panacea. The US is still Israel's biggest trading partner and is still the default market for venture backed start ups. But I hope these suggestions will make some of the pain a bit easier.

More reading on inflation here and here  and here @seekingalpha

My previous posts on Dollar/shekel are here (1/08), here (9/08), here and here.