Friday, March 23, 2012
Prices Going Down
Yesterday I was pleasantly surprised that Vodka Perfect's price went down from 20 shekel to 15 shekel (200 cc bottle). Has Israel entered a deflationary cycle? Deflation is linked to population aging (see graph). Probably we are importing deflation. That is no good for people in debt like me.
Follow Up: The TASE valuation of Israeli banks is 0.77 of their capital. The reason is that Bank Israel does not allow them to declare dividends. According to Leumi analysts, given the general low valuation of Israeli companies in this pre-Iran war times, the banking sector's price is correct. Is this reasoning right? Or bank shares are cheap?
In general, TASE is very cheap these days and one can find stock offered at less that its own capital. It is a classic Graham investment opportunity (BTW, Graham, they say, was Jewish). The problem is that foreign funds are not investing in Israel because their strategy is regional (and we are ... Middle East/Africa, pfuiiaa!) and we may attack Iran. But for a person who is decided to live or go down with Israel, like me, those considerations are irrelevant. For me, this is a buying opportunity.