Dr. Harold Goldmeier is a business &
investment consultant, teacher, and writer. He worked for US governors, and the
Surgeon General, and was a research & teaching fellow at Harvard. He taught
in Tel Aviv and teaches Politics at Touro College. He can be reached at Harold.goldmeier@gmail.com
Investments Complement Charity
In response to the October 7th invasion of Israel and
its declaration of war on Hamas, we urge value investors to seek out and invest
in Israel-based businesses that are publicly traded on one of the American
stock exchanges. Investors need to consult their tax attorney or
accountant when buying foreign-based stocks.
It is our position that investments outweigh charity in sustaining this American ally in troubled times. Substantial investments will demonstrate confidence in Israel’s wherewithal to suffer and build back bigger and better. Investments will keep Israel’s economy humming, facilitate the means for workers to keep their jobs, and ensure economic opportunities are not lost.
NGOs are experts at soliciting donations (charity) and selling Israel Bonds (investment). We applaud their awesome expertise and stupendous success.
Two examples: on the night of June 6, 1967,
following news reports about the outbreak of the Six-Day War, our Chicago
synagogue raised $1M in donations, in one night. On the investment side, since
1951, over $48B of Israeli investment bonds have been sold to
individuals, +90 U. S. state and municipal pension and treasury
funds, corporations, insurance companies, and others because Israel has
been a rewarding investment destination. 20 years later, U. S. House Ways
and Means Chairman Dan Rostenkowski talked to me about modeling a bond program in the image
of Israel Bonds to build Poland’s
economy following
Solidarity’s overthrow of the communist system and Russian domination.
Israel’s Vibrant Economy
First, know that Israel will win this war. Israel’s vibrant economy will hum again. The International Monetary Fund describes “Israel’s impressive (and remarkable) economic performance” for it prowess and innovations. Its GDP is about $522M and grows about $% per annum most years. We fear it will stagnate from a prolonged war. In Israel, reservists are civilians kept away from their tech jobs, as laborers, and factory workers. But when they return, the economy will boom again like America in the 1950s.
Stockanalysis.com compiled a list as of October 11th of 111 Israeli companies listed on U. S. stock exchanges. These Israel-based companies have a total market cap of $154.37B generating revenue of nearly $70B. We are happy to share the list and provide links to investment articles.
Big Picture: War and Markets
Briefly looking at how stocks fared in the past during and after wars, we see investors are initially shaken but soon shrug off war. Investors may shift priorities. Ben Carlson, an institutional asset management leader, tells how the Dow Jones Industrial (DJI) was +50% between 1939 and 1945. When the Korean Conflict and Cold War dominated the news in the 1950s and 1960s, through the Vietnam War in the 1960s and 1970s, Mid-East oil embargos, the Yom Kippur War, and chaos in Iran in the 1970s, 9/11 and the wars in Afghanistan, Iraq, Africa, and the Ukraine into 2023, the S&P 500 return on investment has yielded 11.2% per year.
Following the Yom War, the Dow dropped 16.5% in
1973; it fell another 27.5% in 1974 at the height of the oil embargo and a
recession. By 1976, the Dow was storming up +38% in 1975.
After a week of trading days, the Tel Aviv 35 Index is down a blip 3% to 5% and the Dow has barely moved up or down.
They will be more volatile over the next days and weeks, as Israel prepares to carry out a ground invasion in Gaza.
Takeaway
We expect the declared war against Hamas will last weeks or months
depressing share prices of Israeli-based companies with shares trading on U. S
exchanges. It might be weeks or months but the 111 stocks we identified have
their greatest risks and rewards attributable to intrinsic matters rather than
extrinsic conditions. Israel will not militarily lose this war. A flood of
investment funds will forefend slowing economic growth and a faltering GDP of
an American ally that needs investments more than charity. Give to the charity
of your choice but invest in Israel for the long term. If not now, when?
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