ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the May 2000 issue


The Gyrating Market and the Automobile Syndrome

A woman investor was advised by her broker that her investment portfolio had "crashed". Upon hearing the news she rushed to the showroom of the nearest car dealer and with little fuss bought a new shiny sports car. In her words it was to make her feel good after hearing the unexpected news. The distraught investor was not truly wiped out but her net worth had severely deteriorated and her ego was sorely bruised. She obviously had not heard about Mr.Alan Greenspan's hopes for curbing inflation by lowering stock market values.

The car dealer had hunted high and low until he found the exact second-hand model ordered by his customer. It was a shiny silver 2000 model Toyota Corolla. The dealer had assured his customer that the car had "all the goodies'. Then the bottom fell out of the customer's share portfolio. A "partial liquidation" of a portfolio, which had appreciated in sixteen and a half months by 2200 percent, was to be the source of the purchase price. However, by the time the car was ready for delivery the value of the portfolio had fallen by 60%. The decision to buy the car was put off for some happier day. It seemed like such a pity to sell shares now. "They will go up again," he believed.



Reprinted from the Israel High-Tech & Investment Report May 2000

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