Israel to ramp up Birthright investment


Israel’s government announced it would more than double its investment in the popular Birthright Israel program.

Prime Minister Benjamin Netanyahu made the announcement Thursday night before 3,000 program participants in Jerusalem, The Jerusalem Post reported.

“My government will give more than double its investment in Birthright, and over the next few years we will invest more than $100 million in Birthright,” said Netanyahu, according to the Post. “Together with private donations we can increase the number of people to 50,000 a year.”

Considered one of the most successful initiatives in the Jewish world, Birthright Israel provides free 10-day trips to Israel for Jewish young adults aged 18-26. Some 30,000 people participate in the program each year; more than a quarter-million have participated since its inception in 2000.

Can you say fiduciary duty? Jewish nonprofits must follow new rules


Based on all reports, the evil criminality of Bernard Madoff has decimated the portfolios of hundreds of individuals and charitable organizations. The consequences for ongoing charitable programs and future gifts will be felt for many years to come.

While there should be no limit to the outrage at Madoff, the Jewish not-for-profit community must recognize that this crisis has highlighted grave shortcomings in professional controls in place related to the investment of their funds. Judging from press reports and public communications from numerous institutions, it seems apparent that the basic standards of fiduciary oversight were not in place. Both professional staff and lay leadership should undertake comprehensive reviews of their policies and take responsibility for their shortcomings.

Complete Madoff CoverageAs the community looks forward, it is imperative that the oversight of investments be executed in a manner that meets the highest fiduciary standards. After all, those responsible for overseeing the investments quite literally have the future of many of the most important programs in the Jewish community in their hands.

The large, often undiversified allocations to Madoff indicate that the foundations fell into the worst pitfalls that trap individuals into unwise investments. Among these are: lack of diversification, belief in “genius managers” who promise to deliver above market returns with minimal risk, not understanding the strategy of the funds in which they invest, investing based on reputation rather than doing due diligence and not monitoring the investment activity. While it is bad enough to find individuals who fall into some or all of these traps, to find evidence that those overseeing large sums for the community were no better is very disturbing, to put it mildly.

It also seems from this affair and my research on the investing policies of not-for-profits that many of these institutions joined with the fad of not-for-profits investing in “alternative investments.” Enticed by the success of Yale and Harvard’s enormous endowments they sought to “be like Yale and Harvard” and invest in hedge funds, private equity funds, venture capital, commodity funds and other products despite little real knowledge or professional staff. Yet even David Swensen, Yale’s esteemed manager, has written that neither individuals nor small institutions should follow Yale’s strategies since they lack the large professional staff and resources required to properly screen and manage such investments.Yale has 19 full time professionals overseeing their investments, Harvard Management has a full- time staff well over 100.

A Business Week article in May 2006, “Big Risk on Campus,” reported on smaller endowments investing like the big guys, noting that larger endowments (averaging $1 billion or more) had an average of 21.7 percent of their assets in hedge funds. In second position in the article’s table of smaller endowments with big hedge fund stakes was Yeshiva University’s $1.1 billion endowment with 65.3 percent. Yale’s allocation to hedge funds is 23 percent; Harvard’s, 18 percent.

Ironically, while many foundations concentrated on seeking out exotic, high-risk “alternative” investments, they did not look into allocating a portion of their investments to a better “alternative,” such as investments that would not have entailed above-average risks. Examples would include: socially responsible index funds, a broadly diversified index fund of Israeli stocks or investments in indices of companies investing in clean energy. The vast majority of foundations ignored the opportunity for “doing well by doing good” in their quest to find a “hot hand” to manage their money.

Looking forward, it is imperative that our institutions draft clear investment policy statements and establish appropriate policies and controls. Ideally, the foundations would wind up with an investment portfolio in line with the “best practices” of investment strategy and not much different than that of a prudent individual: broadly diversified with low cost, transparent and liquid index instruments.The parameters of such policies would include:

  • A target allocation for the portfolio among international and domestic stocks, bonds and cash, along with controls for keeping the portfolio within those parameters.
  • No investments in bonds below investment grade.
  • Restrictions on investments in asset- backed securities.
  • Restrictions prohibiting any investments that make use of leverage or derivatives.
  • Restrictions on investments in illiquid investments, such as venture capital and private equity, and on investments that do not have transparent pricing and valuation.
  • No investments in any entities affiliated with members of the investment committee, the board or the professional staff. As a consequence of this one policy, the New York Jewish Community Foundation had no investments with Madoff.
  • Ability to price all investments in the portfolio on a daily basis. Confirmations of all transactions by the next business day.
  • Transactional activity and financial reporting performed by different individuals.
  • Monthly performance reports available to all investment committee members.
  • Annual audit of all investments and procedures by an independent third party.

In addition to the above, serious consideration should be given to an even higher level of transparency: complete posting on the Internet of the full portfolio and its value and performance. Given the extreme lack of controls evidenced by the Madoff affair, such an easily implemented step would go a long way to restoring confidence in the community and in fact may be essential for any success in raising the funds necessary to keep many programs afloat.

Lawrence Weinman is an independent registered investment advisor working with individuals and institutions. He teaches a course on investment management for nonprofits at the AJU and has worked with Jewish nonprofits in their investment strategies. He blogs at www.sensibleinvestments.blogspot.com.

Pyramid power (not)


Northern Israel needs investment to bolster it — security and development are linked


The graffiti on the Galilean bomb shelter that greeted Prime Minister Ehud Olmert wasted no words: “Wake up Sharon, Olmert’s in a coma.”

Watching Olmert tour upgraded and refurbished bomb shelters in the north after the release of the Winograd Report last spring prompted jokes in Israel about rearranging chairs on the deck of the Titanic. Much worse, the hapless images of Olmert checking the bomb shelter shower knobs suggested unfortunate associations for more than 1 million Israelis who fled the war temporarily, many of whom have been scouting for new locations ever since.

As a former intelligence chief told me upon reading Milken Institute’s data on Galilean economic conditions: “You are right. There is negative out migration from the north to the center of the country and from the center to the Diaspora.”

And that out migration is Israel’s enemies’ ultimate objective in launching wars they can’t win in conventional terms. They seek to create the perception that the country has no future.

Thanks in part to the Israeli government’s inaction, that plan is succeeding. The economic situation of northern Israel was deteriorating even prior to the outbreak of the Second Lebanon War. Five years before rockets fell, the north experienced net negative out migration of 23.2 percent. In other words, 33,000 Israelis had already abandoned the north even prior to rockets falling.

These problems were only exacerbated after the war. Poverty levels continue to hit 29 percent of families in the north vs. 20 percent nationwide. Regional family income in the north is only 74 percent of the national average, and unemployment rates run 20 percent higher in the north than in the rest of country.

But now we are told, the showers in the bomb shelters now are supposed to be working, even if the people aren’t.

All measures of the growing social and economic gaps in Israel are refracted and amplified in northern Israel. According to national security authorities, the strategy of Iran and Hezbollah is to weaken Israel’s northern region what Israelis call “the periphery” economically and make a small country claustrophobic.

This strategy successfully weakens morale and created military and diplomatic advantages during and subsequent to the war. Facing conditions of asymmetric warfare, where the home front and front lines of conflict blur, the linkage between national security and economic security become central. Investment is of urgent importance to fully integrate regions of Israel that are peripheral, due to lack of physical, transportation and social infrastructure.

Many long-term and long-promised projects by the central government in the sphere of infrastructure and commercial/industrial development have been postponed. Emergency aid that poured into the north was insufficient and targeted to relief, rather than economic development. Conditions in northern Israel remain vulnerable and its status is worsening.

According to the evaluation by the government examiner’s report (May 21, 2008), most of the Israeli government’s actions in response to the north remain unfulfilled. The report concludes:

  • The government budgeted NIS 4 billion for northern Israel economic development but only allocated NIS 1.6 billion since the war.
  • The government based the budgetary increase upon contributions from abroad that failed to materialize or were deployed to the southern front with the attacks on Sderot and the northern Negev.
  • The government did not operationally execute the rehabilitation plans proposed by government ministries.
  • Government ministries were not obligated to execute northern Israel rehabilitation plans and failed to allocate budgets for that objective.

The next Israeli prime minister, like all the others, will speak loudly and often about national security. But the goal of national security is inextricably linked to economic development.

The next government must lead a private-public partnership that will invest billions in infrastructure and economic projects to fully integrate the north to the country’s dynamic growth center. Israel and the Diaspora have the resources to make “periphery” an anachronistic word in the Hebrew lexicon. But we don’t have much time.

Glenn Yago directs the Milken Institute’s capital studies program and the Koret-Milken Institute Fellows program in Israel. Further information can be found in their report on northern Israel at www.milkeninstitute.org.

Israel’s clean tech advances attract foreign investors’ green


TEL AVIV (JTA) — From cutting-edge geothermal power deep underground to wind turbines and solar panels capturing energy from the sky above, foreign investors are pouring money into Israel’s growing clean tech sector.

And it’s not just Jews.

“Every day I get calls from people asking for opportunities to invest in clean technologies in Israel,” said Michael Granoff, president of the New York-based Maniv Energy Capital and an investor in Project Better Place, the company working to make Israel a testing ground for an electric car.

“That to me is extremely encouraging,” he said. “I believe nothing will determine Israel’s prosperity more than the degree to which it is a leader in innovation around sustainability.”

Clean tech, a catch-all term for emerging technologies focused on renewable and more efficient energy consumption, is soaring in Israel. A wave of new start-ups, academic research projects and new venture capital funds are focusing on the industry, and multinational corporations such as the Coca-Cola Co. and General Electric are scouting out new technologies here.

Fueling the interest in environmentally friendly clean-tech solutions are skyrocketing oil prices, growing concerns about global warming and a push for sustainable solutions to the world’s energy problems.

Investing in Israel’s expertise may not only make good business sense but benefit the worldwide quest for cleaner, greener energy alternatives.

It also may constitute an opportunity to bolster Israel’s international reputation by linking the Jewish state with green innovation.

Jonathan Shapira, a recent American law school graduate who writes a blog on clean-tech investment in Israel, says Diaspora Jews can play an essential role by becoming either consumers of or investors in Israeli technologies.

“Every Jewish family and institution should consider installing solar panels, rooftop wind turbines or energy efficient lighting developed in Israel,” he said. “This will lower their electricity bill, protect the environment, benefit the Israeli economy and help position Israel as a world leader in clean technology.”

The imperative for developing alternative energy sources is particularly acute for Israel because its enemies’ strength derives in large part from the world’s dependence on their oil resources.

“It really makes sense for reasons of economics, but there is also the issue that so much is at stake here,” said David Rosenblatt, the vice chairman of the board of a new solar power company near Eilat, Arava Power, which is headed by Yosef Abramowitz. “This is doing something for Israel’s national security, protecting its energy independence through green power.”

Rosenblatt, who also runs an investment fund in New York, where he lives, said his investment in Arava Power is a Jewish venture as well.

“This is about clean energy, but it’s also about Jewish roots and what I can do to express it and where I personally have value to add,” he told JTA.

In Herzliya, three American immigrants in their 30s have created the first venture capital firm to target the Israeli clean-tech market, Israel Cleantech Ventures. They recently raised $75 million for their debut fund, exceeding the $60 million they originally set out to raise.

Glen Schwaber, one of the firm’s partners, said enthusiasm among investors for Israeli clean tech reflects Israel’s growing reputation as a potential incubator for new technologies that is buoyed by the country’s high-tech success stories.

“Israel has a reputation for innovation and technology, and a mature venture capital environment along with a successful history in entrepreneurship,” Schwaber said. “The next logical place for the clean-tech investor after Silicon Valley and the Boston area is Israel.”

The Jewish state is beginning to capitalize on its experience in such fields as solar thermal technology, wastewater recycling and desalination. Until recently, Israel had the world’s only large-scale desalination plant, off the coast of Ashkelon. Now countries such as China are building them.

“Israel is a great country to beta test some of these new technologies because it is a microcosm of the world’s needs: shortages of water, a large transportation fleet on per-capita basis, and an abundance of solar energy potential,” said Schwaber, 38, who made aliyah from Boston.

Among Cleantech Ventures’ investors are some big names in Jewish philanthropy, including the families of Edgar Bronfman and Stacy Schusterman.

Schusterman, CEO of the Samson Investment Co., a private oil and gas company based in Tulsa, Okla., said she sees her investments in Israeli clean-tech ventures, including Israel’s electric car enterprise, as business, not philanthropy.

“This is a business venture,” she told JTA in a phone interview from Tulsa. “We saw this as an opportunity to leverage Israel’s deep intellectual capital in an area we see as a burgeoning worldwide industry, and by investing it we would have the opportunity to create a hedge against our base business.”

She added, “This is an area where Israel should excel, so as a Jew I have every reason to help make that happen.”

Last month, the city of Los Angeles signed an agreement with Kinrot Incubator, a company located on the shores of the Sea of Galilee that helps entrepreneurs and researchers with water-based technological innovations.

The deal will enable Israeli start-up companies to use water and power facilities in Los Angeles for pilot projects and to conduct joint research with the University of California, Los Angeles on water projects.

Los Angeles is interested in using the Kinrot model to establish its own incubator for water-related technologies.

Assaf Barnea, Kinrot’s CEO, said that although the water market is not new, the hype over going green has given it a new shine in the eye of investors.

“They have now heard about it and want to be players,” he said. “There is huge hype but it’s not just hype. This is a market that is here to stay.”

Das Happy Kapital


Last Monday, I took my ticket from the parking valet at the Beverly Hilton Hotel, turned, and came face to face with John Kerry. He was standing beside me, staring at his cell phone.

“Oh,” I said to the senator, at a loss. “Hi.”

“Hi,” he said, and turned back to his phone.

The doors to the hotel slid open. Former Secretary of Education William Bennett moved past me. We exchanged nods. I turned and ran into Paul Gigot, editorial page editor of the Wall Street Journal. Three steps behind him, Eli Broad whizzed by.

Just another 30 seconds at the Milken Institute Global Conference, the annual gathering that attracts everybody you’ve ever seen on CSPAN, the MacNeil/Lehrer NewsHour and FOX, including the owner of FOX, Rupert Murdoch — I bumped into him coming out of the men’s room.

The annual conference marked its 10th anniversary last week, with three days of lectures, keynotes and seminars on the topics and trends that organizers at the Milken Institute believe will shape our global future.

The Los Angeles Times compared the gathering to the World Economic Forum in Davos, Switzerland or the Clinton Global Initiative Conference. But what makes this high-powered global conference different from all others is the audience: not mainly policy wonks and NGO do-gooders, not politicos and journos (though plenty of all of the above), but investors, corporate types, men and women who collect and distribute private and public capital.

“We run the number one high-yield bond fund in the country!” I heard a conference-goer bark into his cell phone. Many people I met told me they ran hedge funds, though I never did quite figure out what a hedge fund is.

It’s a three-day return to university, if your university hired mostly Nobel laureates and your fellow students were all much richer than you. At about $1,000 per day, it’s just a bit pricier than an Ivy League college.

On Wednesday I attended one of the general sessions in the hotel’s ballroom, at which most of the conference’s 3,000 participants heard the conference’s founder, Michael Milken, in discussion first with Gov. Arnold Schwarzenegger, then with a panel of Nobel laureates. The subject was global warming and energy independence.

The governor laid out how California would lead the way in reducing the gases that cause global warming and developing green technologies. He threatened to sue the federal government if it prevents California from implementing a law reducing greenhouse gases from vehicles within six months. Then, under Milken’s questioning, he switched gears and spoke of “great economic opportunities for green technology.”

Schwarzenegger challenged his audience to invest in California and in alternative energy technologies.

“Everyone needs to look at this as a huge opportunity,” he said.

In Milken’s conversation with the Nobel laureates in science and physics, he prodded them on where future energy investment opportunities lie.

“People are not sitting still on the assumption that we’ll have an energy system based on carbon-based energy,” he said.

But the panelists and Milken seemed to agree that opportunities need government to help out by passing stronger regulations on fuel emissions.

That’s what consistently surprised me at a gathering birthed by a man who has, despite a lifetime in groundbreaking philanthropy, been interred in popular imagination as a poster boy for avarice. For one thing, you end up hearing a lot about alternative energy, the end of oil, the most effective means of Third World development, curing the world’s worst diseases, universal health care, and environmental rescue. And every other chance he gets, Mike Milken himself goes on about healthier eating through soy.

Strip away the power suits and you’re back in a freshman dorm, circa 1978, hearing the campus lefties talk about saving the world.

In fact, idealism infuses this conference. It is at root about doing well and doing good; and often, in the case of investment in energy alternatives and emerging markets, in doing well while doing good. “I’d like to think [government] can tilt the playing field so the private sector is rewarded for doing the right thing rather than the wrong thing,” the Nobel laureate Burton Richter of Stanford University, told Milken. But it was Milken who provided the graph that showed that in the past stronger government regulation has improved energy efficiency while allowing the economy to grow at unprecedented levels.

Clearly, this is not your grandfather’s capitalism.

As I wandered in and out of conference sessions, I discovered not the slash-and-burn mentality of go-go capitalism at work, but something actually closer to the earliest form of capitalism in the Middle Ages. Back then, private capital was a kind of new technology that enabled a nascent middle-class to use its funds to attain wealth previously accessible only to aristocrats. Back then, money in the hands of merchants and guilds challenged the feudal autocracy and funded invention, discovery and social development.

At the Milken Conference, investment was presented as just that kind of engine of human ingenuity, and human capital as a foundation of wealth. The ultimate smart money, Milken and his conference presenters seemed to be saying, is on health and education: there’s no limit as to how much wealth a nation of smart healthy people can generate. At one luncheon, Milken flashed a chart — the man likes his statistics — showing the cost of early deaths caused by heart attacks and cancer.

Invest millions of dollars into finding cures, said Milken — founder of FasterCures, a nonprofit that does just that — and free up trillions in lost wealth.

Nowhere was this noble capital more apparent than in the Conference’s treatment of Israel.

At a time when much of the world makes a special point of singling Israel out for disparagement — just witness the British National Union of Journalists, which last week called for a boycott of Israel after one of their own members was kidnapped by Palestinian terrorists — the Milken Global Conference holds Israel up as an exemplar of how a developing country can combine smart economic policies with investments in education and innovation to unleash enormous economic potential. Milken economist Glenn Yago hosted a nearly two-hour session titled, “Israel: Confessions of an Economic Growth Engine,” which dissected the country’s progress and problems.

Jews join the quest for space commerce


In the 1968 film “2001: A Space Odyssey,” a commercial Pan Am Space Clipper flight carries civilians to the wheel-shaped Space Station V, which features a Hilton Hotel and a Howard Johnson’s. Naturally, the calls to Earth via videophone are handled by AT&T’s forerunner Bell, and the charges for the call go on American Express.

While the film’s rampant commercialism was more social commentary than foresight, recent technological advances have boosted private enterprise into a field once considered government’s exclusive domain.

Commercial space interests are now playing a critical role in the dawn of the second space age — one built on business ventures and international cooperation. Instead of Hilton and Pan Am, the corporate names associated with the commercialization of space include Budget Suites and Virgin.

A new space race by corporate interests is being fueled by the dreams — and wallets — of prosperous entrepreneurs. Their investments are leading to the kind of technological developments that seemed like science fiction a decade ago. And Jews are represented in all aspects of the field, from Microsoft co-founder Paul Allen to former NASA director turned consultant Dan Goldin.
“It’s at every level. You see Jews in leadership positions as well as rank-and-file engineers and lawyers,” said Mike Gold, a Brandeis graduate who serves as corporate counsel for Bigelow Aerospace, a commercial spacecraft and space habitat company founded by Budget Suites mogul Robert Bigelow. “It’s part of the dream that a lot of people share.”

The tantalizing prospect of manned space travel was first realized by Yuri Gagarin’s flight aboard the Soviet-made Vostok 1 on April 12, 1961, which was followed by the U.S. team of Alan Shepard and John Glenn in NASA’s Friendship 7 on Feb. 20, 1962.
Immediately after the Apollo 11 moon landing in 1968, air carriers Pan Am and TWA started taking reservations for future flights to the moon; Pan Am logged more than 90,000 reservations.

The Reagan administration provided the legal framework for private space travel in 1984 with the passage of the Commercial Space Launch Act. Under government regulations, the FAA’s Office for Commercial Space Transportation oversees private space launches, while the Office of Space Commercialization, part of the NOAA Satellite and Information Service, coordinates space-related issues, programs and initiatives within the Department of Commerce.

But space tourism continued to be viewed as the stuff of “2001” until former JPL scientist Dennis Tito paid $20 million to U.S.-based Space Adventures to visit the International Space Station on April 28, 2001, with the assistance of Russia’s federal space agency. His seven-day space holiday, and that of three other space tourists, has brought the dream of civilian space flight another step closer.

But the reality on the ground is that the industry carries tremendous pressures, especially to build successful business strategies that don’t rely on a few wealthy entrepreneurs’ bank accounts.

“One of the reasons why there hasn’t been a lot of truly commercial ventures in the space industry to date are the large upfront capital requirements,” said Lawrence Williams, vice president for international and government affairs at SpaceX, who is Jewish and came to the industry through communications work for the Clinton administration and Bill Gates’ satellite project Teledesics. “That’s why typically it’s only been governments that have been involved in this.”

The first private space flight took place on June 21, 2004, when the commercial suborbital craft, SpaceShipOne, reached a point more than 100 kilometers above the earth. The estimated $25 million cost of developing SpaceShipOne, which was built by Scaled Composites and went on to capture the $10 million Ansari X Prize on Oct. 4, was underwritten exclusively by Microsoft’s Allen.
His Mojave Aerospace is now licensing the technology to VirginGalactic, which plans to send up 500 people annually on a fleet of five SpaceShipTwo ships starting in 2008. The reservation list currently stands at about 65,000 people, with suborbital trips costing $208,000 per passenger.

Companies like Blue Origin, SpaceX, Space Island Group and Bigelow Aerospace know that establishing a profitable presence in space must be based on more than just enabling passengers to experience seven minutes of weightlessness or allowing private citizens to live aboard an orbiting space hotel for a week. Industry experts say the only proven revenue stream thus far has been satellite development and satellite launches.

Alon Gany, head of the Fine Rocket Propulsion Center at Technion–Israel’s Institute of Technology, said that space investment from Israel’s private sector is tied almost exclusively to satellite technologies.

“One of the main efforts is the improvement of communication satellites. The other thing is developing specific components that are necessary for advanced satellites, like high-resolution cameras and cameras in different wavelengths, like infrared,” he said.
Risk-averse firms are looking to opportunities that can turn a profit — from satellites launches and NASA supply contracts to unique research and development in a zero-gravity environment.

“There’s all sorts of new drug treatments and biotech development that you can do in microgravity that you can’t do on Earth. It’s like opening up a whole new laboratory where all the rules are different because everything reacts differently,” Bigelow Aerospace counsel Gold said.

Gold, 33, said his work for Bigelow Aerospace is the fulfillment of a longstanding dream fed by the first space age.

“I grew up a ‘Star Trek’ fan, my grandfather worked on the Apollo missions, and I always had a huge interest in space.

Unfortunately, my interest was directly proportional to my lack of skill in the sciences, which is why I had to find my way to it via law,” he said.

Gold says that while space travel carries inherent dangers, private industry stands to lose more from a catastrophic loss than the federal government.

“Even without government regulation, we’re already highly incentivized. If we want to have industry here, customers and participants need to have a safe, reliable and affordable system in place,” he said.

As private industry prepares to stake claims in space following government’s Lewis-and-Clark-like exploration of the final frontier, many experts believe that a side benefit of putting more civilians in orbit will be a greater push for peace on Earth, especially in hot spots like the Middle East.

R.E. Hard Crash? Soft Landing? Bursting Balloon? Leaking Balloon?


Mark Cohen thinks those doomsday scenarios about an impending Southland housing crash miss the mark. And the founder and president of Beverly Hills-based Cohen Financial Group has learned a thing or two about real estate over the last 20 years.

With an MBA from USC and a law degree from Loyola Law School, the 47-year-old mortgage broker helped secure nearly $1.1 billion in home loans last year, making him the No. 1 individual mortgage loan originator in the country, according to Mortgage Originator Magazine.

When not spending time with his three children and wife Laurie, Cohen has been involved in the local Jewish community.

A member of The Jewish Federation of Greater Los Angeles’ Real Estate and Construction Division, Cohen has also played an active role at Sinai Temple for more than two decades. He and his wife have long supported ATID (which translates as future in Hebrew), a Sinai program that trains future Jewish leaders. They also recently contributed funds toward the writing of a new Torah.

The Jewish Journal spoke to Cohen about the recent reversal in the local housing market.

Jewish Journal: Why has the housing market slowed in Southern California?

Mark Cohen: Southern California is a great place to live, which is why so many people want to live here. However, that also means the supply of apartments, houses and condos is limited. Over time, this supply-and-demand situation in housing has pushed prices up dramatically, pricing many people completely out of the market. Added to this are the interest-rate hikes by the Fed. Rates have increased by about 2 1/2 percent over the past few years, and that has made the cost of borrowing more expensive, closing the door on even more potential homeowners.

JJ: If the Fed raises interest rates to keep inflation in check, will that help or hurt the market?

MC: The jury is still out on whether or not the Fed will continue to raise rates. It all depends on whether or not they can keep inflation under control. If there are more rate increases in the near future, they will likely have a negative effect on the market in the short term. However, if the Fed is successful in keeping inflation in check, they can keep the door open for future rate cuts should there be a slowdown in the economy. Recent economic reports are showing that inflation has moderated for the time being, which means the Fed’s tightening cycle may be over. And that would have a positive impact on the real estate market.

JJ: What areas of the Southland are most at risk of having the bottom drop out? Why?

MC: It’s difficult to single out specific areas in Southern California that have the most risk. However, right now, San Diego seems to have an oversupply of new condominiums on the market due to all the speculation that occurred over the past few years. There’s also usually a deeper correction in areas where there has been excess in new construction. Palm Springs is an example of this. On the other side of the coin, the Westside, South Bay and San Fernando Valley will likely fare better during a slowdown because of the lack of new construction, limited supply of homes and desirability.

All in all, Southern California is a great place to live and historically, over time, real estate here has proven to be a great investment.

JJ: Do you anticipate a hard or soft landing locally?

MC: A soft lading will depend on several factors. First, the direction of interest rates will have a big impact, as will the strength of the local economy. As long as jobs are being created and the economy stays at its current growth levels, it’s highly unlikely that we’ll experience a hard landing.

Obviously, the actions by the Fed in the next few months will affect the local real estate market for the foreseeable future.

JJ: How long do you expect the market to remain soft?

MC: It really depends on the economy. If we have continued job creation and continued economic growth, the market will recover more quickly. Fewer jobs created and slower growth will mean a longer slowdown. The real driving force behind the real estate market isn’t interest rates; it’s the economy. That’s because even though fixed-interest rates have risen recently, they are still at manageable levels.

JJ: How is this housing market of today different from the boom-and-bust cycle of the late 1980s and early 1990s?

MC: This is a very different market from the one we saw in the late 1980s or early 1990s, primarily because the Southern California economy is now much more diverse. During that period, the economy here was based on the aerospace, defense and entertainment industries. Today our economy is much more diverse, with financial services, technology, biotechnology and other industries playing major roles on the region’s vitality. A more diverse economy means the chances of a hard economic landing are reduced, and this, in turn, helps to support the housing market.

JJ: What kind of industries might suffer in a soft housing market, and how could that impact the entire local economy?

MC: The real estate industry has a large effect on the Southern California economy, because there are so many people employed in it either directly or indirectly, including lenders, title companies, escrow agents, real estate sales agents, contractors, and developers, This means that a prolonged slowdown would hurt the folks employed in these industries and the overall local economy as well.

JJ: How much do you expect housing in Southern California to drop in the next year? What price ranges will be hit hardest?

MC: I don’t expect prices will fall more than 5 percent to 10 percent from the market highs of a couple years ago, with the hardest hit homes being those in the mid-level price range between $1 million to $3 million.

JJ: What advice would you give to someone who is considering buying or selling a home in Los Angeles?

MC: I’m a big proponent of home ownership. Don’t we all work hard so we can eventually own our own home? My advice is for people to feel comfortable living in a new home for at least five years so interest rates and real-estate-cycle influences are reduced. I don’t think we’re in a market that allows for short-term housing speculation, since the market is extremely volatile.

Jewish Journal September 1, 2006 43

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Warren Buffett’s Jewish Connection


Warren Buffett is not a Jew; in fact, he describes himself as an agnostic.

Still, the billionaire investment guru, who made big news in May when his Berkshire Hathaway corporation bought an 80 percent share in the Israeli metalworks conglomerate, Iscar, for $4 billion, for years has been making his mark on the U.S. Jewish community back home — although sometimes in a roundabout way.

“Proportionally, if you look at the number of Jews in this country and in the world, I’m associated with a hugely disproportionate number,” said Buffett, the second-richest man in the world. His life, he added, “has been blessed by friendship with many Jews.”

The Israeli government stands to reap about $1 billion in taxes on Buffett’s purchase of Iscar. Shortly after announcing the deal, Buffett said he was surprised to learn that a Berkshire subsidiary, CTB International, was purchasing a controlling interest in another Israeli company, AgroLogic.

In Israel — which Buffett plans to visit in the fall — the hope is that the deals will have longer legs: Buffett himself has not ruled out future purchases there and, considering his status as a leading investor, observers say others also may take a look at Israeli companies now that Buffett has done so.

“You won’t find in the world a better-run operation than Iscar,” Buffett says. “I don’t think it’s an accident that it’s run by Israelis.”

Among the first companies Buffett acquired after launching Berkshire Hathaway, the Omaha-based investment and insurance giant, was The Sun Newspapers of Omaha, then owned by Stan Lipsey, one-time chairman of The Jewish Press, Omaha’s Jewish newspaper.

“At the time, the Omaha Club did not take Jewish members, and the Highland Country Club, a golf club, didn’t have any [non-Jewish] members,” Lipsey recalled. “Warren volunteered to join the Highland” — rather than the Omaha — “to set an example of nondiscrimination.”

Buffett happily recalls the fallout from his application.

“It created this big rhubarb,” he said. “All of the rabbis appeared on my behalf, the [Anti-Defamation League] guy appeared on my behalf. Finally they voted to let me in.”

But that wasn’t the end of the story, Buffett said. The Highland had a rule requiring members to donate a certain amount of money to their synagogues. Buffett, of course, wasn’t a synagogue member, so the club changed its policy: Members now would be expected to give to their synagogues, temples or churches.

But that still didn’t quite work, Buffett recalls with a laugh, because of his agnosticism.

In the end, the rule was amended to ask simply that members make some sort of charitable donation, and the path to Buffet’s membership was clear.

“He’s an incredible guy,” said Lipsey, today the publisher of the Buffalo News. In 1973, The Sun won a Pulitzer Prize in local investigative specialized reporting for an expose on financial impropriety at Boys Town, Neb.

“Warren came up with the key source for us knowing what was going on out there,” Lipsey said.

Buffett himself researched Boys Town’s stocks to bolster the story, Lipsey added.

In the 1960s, Omaha Rabbi Myer Kripke decided to invest in his friend Buffett’s new business venture. Their wives had become friendly, he said, and the foursome enjoyed playing the occasional game of bridge together.

“My wife had no card sense and I was certainly no competition to Warren, who is a very good bridge player and a lover of the game,” said Kripke, rabbi emeritus of Omaha’s Conservative Beth El Synagogue. “He’s very bright and very personable and very decent. He is a rich man who is as clean as can be.”

Kripke, father of the noted philosopher Saul Kripke, bought a few shares in Berkshire Hathaway and quickly sold them, doubling his money, he said.

Recognizing a good thing when he saw it, he bought a bunch more shares in his friend’s company, shares that by the 1990s had made Kripke — who says he never earned more than $30,000 a year as a rabbi — a millionaire.

Asked if he credits Buffett with his financial success, he didn’t hesitate.

“Entirely, yes,” he said. “I never had much of an income.”

The Sun newspaper group was not Buffett’s only early purchase of a Jewish-owned company. In 1983, sealing the deal with a handshake, Buffett bought 90 percent of the Nebraska Furniture Mart from Rose Blumkin, a Russian-born Jew who moved to the United States in 1917.

In 1989, he purchased a majority of the stock in Borsheim’s Fine Jewelry and Gifts, a phenomenally successful jewelry store, from the Friedman family.

“He has many friends in the Jewish community,” said Forrest Krutter, secretary of Berkshire Hathaway and a former president of the Jewish Federation of Omaha.

Buffett’s former son-in-law, Allen Greenberg, is a Jew, and now runs the Buffett Foundation, much of whose work has dealt with reproductive rights and family-planning issues. Buffett’s personal assistant is Ian Jacobs, who goes by his Hebrew name, Shami.

Buffett himself counts the late Nebraska businessman Howard “Micky” Newman and philanthropist Jack Skirball as among his “very closest friends.”

Further, Buffett said his “hero and the man who made me an investment success” was Ben Graham. Graham, along with Newman’s father, Jerry, ran a New York fund called Graham-Newman Corp.

“After besieging Ben for the three years after I received my degree from Columbia, Ben and Jerry finally hired me,” Buffett said. “I was the first gentile ever employed by the firm — including secretaries — in its 18 years of existence. My first son bears the middle name Graham after Ben.”

Buffett “is very much honored in the Jewish community,” Kripke said.

 

Sondheim Knows How to Book ‘Em


Some people begin collecting because they’ve coveted certain objects for as long as they can remember. Others collect as an investment. And, of course, there are poseurs who hire prestige dealers to buy them trendy art because they want to be viewed as taste mavens.

Harry Sondheim, a retired criminal prosecutor for the L.A. County D.A.’s office, started to collect Judaica for none of those reasons. He was traveling in Holland when he simply noticed an artifact that appealed to him: “They had a museum, Der Weg, which means the Weighing House. They had an artist named Bicart. I bought some postcards with depictions of Jewish ceremonies on them. You can’t buy those postcards any longer.”

Reflecting his legal training, Sondheim answers questions methodically. Even his decision to focus on rare books, as opposed to art, shows a judicious attitude.

“It’s pretty hard to falsify a book,” he said, adding, “they’re not as likely to be stolen. If you have a thief in the house, they’re more likely to steal a silver menorah.”

Maybe it matters, too, that Sondheim attended the University of Chicago in the era when that institution still featured the Great Books courses.

Sondheim will be speaking at the 39th California International Antiquarian Book Fair’s “Collecting Your Roots” panel on Sunday, Feb. 19.

He especially likes rare manuscripts that include illustrations or, as he says, “depictions” of Jewish ceremonies and customs.

Sondheim has never taken a vacation specifically to collect books, but has purchased manuscripts at synagogues, museums and bookstores around the world, including Germany, where he can trace his genealogy back to around 1760. His family fled Germany in 1938, several months before Kristallnacht. The tomes he favors are typically printed in German, their existence all the more remarkable because of the Nazis’ program of burning Jewish books.

The best deal he ever got was a work by Arthur Szyk, a Polish Jewish artist from the first half of the 20th century who specialized in political caricatures and miniature painting. Given Sondheim’s background in the law, it is not surprising that he bought the “Statut of Kalisz.” The book is Szyk’s interpretation of a 13th-century manuscript that has been called the “Jewish Magna Carta,” a decree by which a Polish king gave Jews civil rights. Szyk illustrated the manuscript while also relating the statute to some other events in Jewish history.

“One page shows different occupations a Jew might have had, weaving, baking, a cobbler,” Sondheim said. “I acquired that at a reasonable price, around $17,000. Someone else’s copy was recently auctioned off for $64,000.”

Sondheim does not use eBay though he’ll search through an auction house’s Web site, which he calls “the equivalent of having their catalog.”

Collecting, he says, is “a sort of continuum. There are pictures of chuppahs from hundreds of years ago, and you have chuppahs today. You live the present through the past.”

The 39th California International Antiquarian Book Fair will be held at the Hyatt Regency Century Plaza Hotel, 2025 Avenue of the Stars, from Friday, Feb. 17 through Sunday, Feb. 19. Harry Sondheim will speak at the “Collecting Your Roots” panel, a free seminar, on Sunday at 2 p.m. For information, call (800) 454-6401.

 

Taking — and Giving — Stock


Move over fountain pens. If the Blue and White Fund has its way, the trend in bar and bat mitzvah gift giving might be instruments of the financial kind.

The Blue and White Fund is a diversified U.S. mutual fund that exclusively invests in Israeli companies traded on the NASDAQ, New York, Amex and Tel Aviv stock exchanges. The fund is offering free $18 mutual fund certificates to every American bar or bat mitzvah. Friends and relatives are encouraged to buy gifts of stock in the fund, as well.

The only condition of the free offer: Each teen must have proof that he or she has attained a religious rite of passage.

Shlomo Eplboim, the fund’s founder and CEO, launched the project two years ago, hoping that receiving a portion of the Israeli mutual funds would spur young teens to a lifelong interest in Israeli investment.

“I guarantee that giving the fund is better than giving Kiddush cups,” Eplboim said, adding that the next generation “does not believe in charity” as much as it believes in “innovation and brainpower.”

To date, the fund has distributed more than 450 free certificates, and that number is expected to increase. Eplboim said more than 1,000 requests were received in 2005 — following the group’s new promotional partnership with the Jewish National Fund’s (JNF) bar and bat mitzvah project, which encourages families to use familiar JNF tree certificates as simcha invitations or thank-you notes.

“For every child that approaches the Blue and White Fund for a share, we plant a tree for them as a gift. Conversely, bar mitzvah-age kids learn about the Blue and White Fund by participating in the JNF’s bar/bat mitzvah simcha program,” said Rona Rodrig, JNF director of product and campaign development. “Investment and charity for Israel go hand-in-hand.”

Eplboim believes that teens who follow their Blue and White Fund investments will “learn about investing in the backbone of Israeli companies, which is incredible.” By introducing teens to Israeli investing at a young age, Eplboim hopes these same youngsters will be more likely to become investors — hopefully in Israel — as adults.

“That is exactly what happened to me,” said Stuart Peskin, principal for State Street Global Advisors. Peskin said receiving seven shares of Coca-Cola stock on his seventh birthday made a “huge impact” on his chosen career path.

Yet, some of today’s teens are more skeptical.

Jake Seltman, 12, a seventh-grader, said that if he were to receive the fund as a gift, he would consider further investment in Israel only “if the fund really works.”

Josh Mangel, another middle school student, is already a savvy investor.

“Two years ago … I saw Yahoo growing really fast, almost $3 [per share] in a week,” he said. “I bought the stock and made a lot of money. If I saw that [Blue and White] mutual fund grow, I’d invest in an [Israeli] company.”

Adult skeptics worry about the stability of Israeli investments following years of heightened Middle East terrorism.

Tom Glaser, president of the American Israel Chamber of Commerce’s Southeast region, said that while terrorism has “had an impact on the Israeli economy, many companies survived intact. Israel is second only to the United States in high-tech startups, and [these companies] are strongly supported by venture capital from Israel and all over the world.”

Glaser said many Israeli companies are grounded in “real, innovative technology … some of the most ‘disruptive’ [cutting edge] technology anyone has ever done. Israel has the most companies traded on NASDAQ besides the United States and Canada…. It is a true phenomenon.”

Eplboim and his partners also believe that there’s a discrepancy between the media’s portrayal of Israel and the growth potential of Israeli companies. He sees no danger in the country’s geopolitical situation, because “Israel has been dealing with this for 56 years.”

“The biggest asset Israel has is its education,” said Eplboim, citing statistics that Israel leads the world with the largest number of university graduates per capita, ranks third globally in the number of patents issued and spends 7 percent of its gross domestic product on education, despite the political turmoil that receives so much media attention.

Although the Blue and White Fund is exclusively invested in Israeli goods in order to support Israel, the free funds are not exclusively limited to Jewish teens. Any child who can supply proof of a religious ceremony (a copy of an invitation or letter from a religious official) is eligible; young Christians who celebrate their first communion or confirmation can also receive a free $18 fund investment.

To register your bar or bat mitzvah for a free shares of the Blue and White Fund, call (877) 4BW-FUND or visit ” target=”_blank”>www.jnf.org.

 

A Developing Reputation


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The two young, sari-clad women, one in blue and one in orange, stand in the thatched-roof meeting hall, take hold of the microphone and join their voices.

“We don’t need any fancy materials,” they croon by heart. “What we need is just some food to live. We don’t ask for a refrigerator, a TV or a car. We just need some small capital to start a business.”

The audience of women in the village of Alamarai Kuppam applaud with enthusiasm. The few men, seated or hovering around the edges, are more circumspect, but they, too, nod approvingly.

Call it women’s lib, post-tsunami-India style.

The outpouring of financial support that followed the 2004 tsunami has accelerated efforts to improve the lives of rural women — an initiative that goes well beyond helping families recover from the tsunami.

“This disaster has given us a space to create gender equality,” says Attapan, the director of Rural Organization for Society Education (ROSE). ROSE is among the Indian nonprofits supported by the American Jewish World Service (AJWS), which focuses on international development based on the Jewish value of tikkun olam, or repairing the world.

Before, says Attapan, many fishing villages functioned almost as closed societies, distrustful of outsiders, with women locked into traditional, subservient roles. It’s still a country of arranged marriages, and, in places, instances of girl infanticide and widow burning.

But in this region, when the tidal wave took everything, these villagers had to look outside for help. The women, it turned out, were eager for expanded roles. And many men quickly realized that not only could they benefit from the outsiders, who brought resources and new ideas, but also from the resourcefulness of their own spouses, daughters and mothers.

Attapan’s organization has worked with women from fishing villages to help them develop business skills, such as tailoring and growing and selling herbs.

The two singing women are performing the homemade anthem of an informal women’s “congress” from 14 villages that has gathered in Alamarai Kuppam under the auspices of the Ghandian Unit for Integrated Development (GUIDE). GUIDE is trying to make women politically powerful and to break down traditional Hindu class divisions.

The caste system, although officially abolished in 1949, remains a potent and denigrating social force. The mixture of castes among the women gathered in Alamarai Kuppam is striking: It includes Dalit participants, the group once known as untouchables; they still suffer pervasive discrimination.

At the meeting, women rise group by group to proclaim their successes.

“We stopped the men from making alcohol in our village,” one women says.

Another exclaims: “We made demands for tsunami relief and got it.”

“We got schools to reduce their fees,” a third says.

This activism is true and courageous feminism, says R. Vasantha, development consultant for GUIDE. “In traditional society, if a woman speaks out about a problem, especially a problem with an abusive husband, she is an immoral woman. These women will now go to a police station and file a case.”

A delegation of women from four villages recently demanded that a man reserve some property and inheritance for a second wife he had taken, as well as for the woman’s baby. And in Alamarai Kuppam, women and GUIDE workers went to the police to halt an arranged marriage between an unwilling 13-year-old and an older man who wanted a second wife.

The 13-year-old’s parents had made the deal for money. Villagers later raised money to help the family.

And, when it comes to the business theme of the homemade anthem, these women aren’t waiting for opportunity to come looking for them. They’ve opened fish stalls in nearby towns to sell the village catch. And they’re going to start an ice factory to keep their fish fresh and to sell ice to others.

Working with women, particularly educating them, is probably the “best single investment” that can be made in international development, said Michael Cohen, director of the New School for Social Research’s graduate program in international affairs in New York. “It helps on the income side and reduces the family size.”

Both elements, he added, are key to reducing rural poverty.

 

Some Places To Give
A partial listing of organizations involved in tsunami relief

American Jewish Joint Distribution Committee
Web site: http://www.jdc.org/

American Jewish World Service
Web site: http://www.ajws.org/
45 West 36th Street, 10th Floor
New York, NY 10018-7904
Tel: (212) 736-2597
Regional: (415) 296-2533
Toll free: (800) 889-7146

Church World Service
Web site: http://www.churchworldservice.org/
Regional office: http://cwscrop.org/californiasouthwest/
2235 N. Lake Ave Suite 112
Altadena, CA 91001
Tel: (626) 296-3195
Toll Free: (888) CWS-CROP or (888) 297-2767

Doctors Without Borders
Web site: http://www.doctorswithoutborders.org/
333 7th Avenue, 2nd Floor
New York, NY 10001-5004
Tel: (212) 679-6800
Local: (310) 399-0049

Global Fund for Children
Web site: http://www.globalfundforchildren.org/
1101 Fourteenth Street, NW Ste. 420
Washington, DC 20005
Tel: (202) 331-9003

Global Greengrants Fund
2840 Wilderness Place Ste.
A Boulder, CO 80301
Tel: (303) 939-9866

International Medical Corps
Web site: http://www.imcworldwide.org/
919 Santa Monica Blvd. Ste. 300
Santa Monica, CA 90404
Tel: (310) 826-7800

International Rescue Committee
Web site: http://www.theirc.org/
122 East 42nd Street
New York, NY 10168-1289
Tel: (212) 551-3000

Mercy Corps
Web site: http://www.mercycorps.org/
Dept. W
3015 SW 1st Ave.
Portland, OR 97201 USA
Tel: (800) 292-3355

Oxfam

Web site: http://www.oxfamamerica.org/
26 West Street
Boston, MA 02111
Tel: (800) 77-OXFAM or (800) 776-9326

Wanted: 1 Rich Jew


I have a friend who may come into a large sum of money. Not millions, but tens of millions. Sometimes, she told me, she daydreams about all the charities and causes she’ll donate to.

“That’s what I want to be, one of those people who sits around all day and gives out money,” she said.

It’s also exactly the sort of person that her current un-rich self has always sought out, a person who could give to causes that she favors, like her children’s school.

That makes my philanthropist-in-waiting both all too rare and all too common. Rare because just 6 percent of Jewish megadonors give to Jewish causes, according to the Institute for Jewish & Community Research in San Francisco. An institute study found that between 1995 and 2000, of the $5.3 billion given by Jewish megadonors ($10 million or above in one year), only $318 million went to specifically Jewish causes.

But she’s all too common because she, like so many others, is always searching, waiting for that one big donor who will make her own organizational dream come true.

The hope for the One Rich Jew may not be as old as the messianic dream, but it is at least as fervent.

Last month, the leaders of a new Israeli charity came to visit me. They had flown from Tel Aviv to Los Angeles, and it wasn’t, they made clear, to see Disneyland.

“Who do you know,” they asked, “who will want to help us?”

I’d fielded exactly the same plea from the man who sought a cure for a rare neurological disease that afflicts many Ashkenazim; he had been in the week before; and from members of a new synagogue the week before that. And from the woman who hopes to create a new nonprofit think tank.

They all wanted to find One Rich Jew.

“You and everybody else,” I told them all.

The desire is understandable. We live in a large Jewish community, many of whose members have done quite well, to put it mildly. On the Los Angeles Business Journal’s list of the 50 richest Angelenos, four of the top five happen to be Jewish. Their estimated net worth is $23.7 billion. It is incomprehensible to those who need a few grand to print brochures why the rich won’t just fork it over.

I know the feeling, as when I arrived at a bake sale a few weeks back with my little tray of brownies. I was told to put them on a table in the host’s garage. Beside the table was a new Ferrari. Sure, a couple of us parents wondered why we were baking sweets at 2 a.m., then shlepping across town to deliver them and standing around trying to make change for endless $20s, when this woman could ditch the Ferrari for, say, a top-of-the-line Volvo, and donate the spare $120,000 to the cause. That would cover 10 years worth of budget for the group that my brownies are propping up.

It’s not like that One Rich Jew is elusive or mysterious. They live among us, they just don’t seem to give us enough money.

How much is enough? Were I in their shoes, or wallets, what would I do? Who are we to tell them how much to give?

These are fair questions. The truth is, Jewish charitable contributions add up to staggering numbers. Private Jewish charitable foundations in the U.S. control some $30 billion in assets, and give about $2.5 billion annually, according to Mark Charendoff of Jewish Funders Network. The skein of Jewish philanthropies, from synagogues and schools to Friends of This and Federation of That, exists only because wealthy people have stepped up.

But need forever outstrips supply, and the refrain I hear, week in and week out, is, “If only we could find One Rich Jew….”

I am no expert, but I’ve developed three ideas to share:

1. The One Rich Jew wants to give.

He’s looking for a good cause, a good reason, a good story. A few of them believe you can take it with you, but most know better. “The Almighty has been good to us,” Irving Stone, the founder of American Greetings, the world’s largest publicly held greeting card company, once told a reporter. “You can only eat three meals a day.” Presented with an inspiring tale, an opportunity to extend a legacy beyond this life, and a chance to make a real difference, most donors will say yes.

2. It’s not your money, it’s his/her money.

The One Rich Jew didn’t make money for you to tell him how he should spend it. It’s true that a few of the superwealthy will give to causes, in the words of the late Jewish Agency exec Moshe Shertok, “as uncaringly as cows give milk,” but most cannot be guilted or bullied into philanthropy. For them, especially for the younger donor generation, philanthropy is an investment — in humanity, in medicine, in Judaism — and they need to see the hard logic behind the touted pay-off.

3. The One Rich Jew doesn’t date, he marries.

It takes a solid introduction, a good first meeting, a long courtship, and then a good, steady relationship. Ask the people over at the Friends of Ben-Gurion University, whose decades-long relationship with the Marcus family of Southern California led to a $200 million donation earlier this year, the largest single gift ever made to an Israeli university.

Of course, outside the wealth and glamour exists a world of need that can be met for far less than $200 million. In these places, $25 or $100 can go a long way. Perhaps we should also look in the mirror, and ask if that One Not-So-Rich Jew has given all he can.

 

Little-Known Givers Have Big Hearts


 

Robert Rosenthal, a self-described “typical Jewish boy from Manhattan,” sometime bull rider and country music addict, has morphed into the godfather of entertainment at military bases across the United States.

He is among the many Angeleno volunteers and philanthropists, often little known, who are the propelling forces behind notable enterprises both in this country and Israel. The Journal recently interviewed both Rosenthal and another “propelling force” — investment manager David Polak.

Rosenthal’s transformation began when, as a kid, he worked one summer on a dude ranch in Arizona. Although he did all the dirty work, he never got over the experience. He entered rodeos, studied ranch management and never went out without his Stetson hat.

In the 1960s, after Army service, he moved to Studio City and became a successful entertainment lawyer. He retired a few years ago.

Always an ardent patriot, after Sept. 11, Rosenthal felt strongly that he had to do something constructive. When he learned that in contrast to USO shows for troops overseas, there was no similar entertainment at stateside bases, he suggested to Defense Secretary Donald Rumsfeld that something be done to close the gap.

Rumsfeld thought it was a neat idea, but let it be known that the mechanics and expenses would have to be borne by public-spirited citizens — such as Rosenthal.

Drawing on his professional background, show biz contacts and family foundation, Rosenthal, now 68, and his wife, Nina, set up the Spirit of America Tour project.

As a first step, he went to Nashville, the country music capital, invited managers and agents of some of the biggest acts and asked them to list dates when their performers were not tied up with commercial gigs.

Then, slashing Pentagon red tape as he went along, Rosenthal coordinated the dates with commanders of Army, Navy and Air Force bases and staging areas across the country.

Without a staff, the Rosenthals have created a show circuit that a professional impresario might well envy. They started with five concerts and shows in 2002, escalating to 18 in 2003 and 21 last year.

Their most frequent and popular performers have been country music stars Clint Black, Charlie Daniels and Travis Tritt. Other favorites have been Blood, Sweat and Tears, David Clayton-Thomas and comedian Dennis Miller.

The entertainers work without fees (though Rosenthal covers their expenses), and the audiences, including families of soldiers and sailors, never pay a penny.

Rosenthal attends all shows west of the Mississippi, while his Nashville liaison, Cathy Gurley, does the same for the eastern part of the country.

By now, Rosenthal has become known as a “one-stop shopping center” for artists who want to entertain the troops.

“Their agents know exactly whom to call,” he said.

Rosenthal, who also put in a stint in the 1960s as a documentary and feature filmmaker (including “Been Down So Long It Looks Like Up to Me”) is a man of many interests.

Among the beneficiaries of his volunteer work and money have been Maccabi USA, Professional Bull Riders and Los Angeles Junior Ballet. He has also served on the California Boxing Commission.

As for his present fulltime Spirit of America endeavor, Rosenthal comments, “When you hear 15,000 military cheering an act, that’s the biggest reward. We live in the greatest country in the world, and I feel privileged to do something for it.”

David Polak heads a major investment management firm in Century City, whose shrewdest bet may have been on the brains of an Israeli professor.

Some 10 years ago, Polak and his wife Janet, longtime supporters of the Technion-Israel Institute of Technology, decided to endow a research chair in the life sciences at the Haifa-based institution.

They consulted with then Technion president Zeev Tadmor, who suggested one of his most promising scientists, Aaron Ciechanover, as the first incumbent of the new chair.

The Polaks were on a cruise last October and while surfing the Internet pulled up a news item that Ciechanover had just been named as the 2004 Nobel Prize winner in Chemistry, together with his Technion colleague Avram Hershko, and American Irwin A. Rose of UC Irvine.

“We were exhilarated,” recalled David Polak, “and we immediately e-mailed our congratulations.”

The Technion professors are the first Israeli Nobelists in the sciences and with Rose shared the $1.35 million prize. They were recognized for their research on the regulatory process taking place inside human cells, a discovery leading to the development of drugs against cancer and degenerative diseases.

On receiving word of the award, Ciechanover noted, “I don’t think our work could have been done without the help and support of the Polaks and the American Technion Society.”

Polak, who supports numerous other Jewish and Israeli causes, will be reunited with the Israeli scientists in June, when the Technion dedicates the new David and Janet Polak Center for Cancer Research and Vascular Biology.

An MIT (Massachusetts Institute of Technology) engineering graduate, Polak said that his support of the Technion is based on his concern for the growth and survival of Israel.

“Israel’s main asset is its brainpower and the Technion provides this raw material for a high-wage industry,” he said. “The country’s export economy and national security depend on technologically trained men and women.”

 

Ask Wendy


Loose Lips Sink Schools

Dear Wendy,

I have spent hundreds of hours volunteering at my children’s
school and I am an active member of the parent council. My kids love the school
and would hate to leave, but there seems to be a problem with loose lips. After
discussing my daughter’s personal problem with one of her teachers, I learned
that this teacher had told another student — who then told others — about the
conversation. In a separate incident I approached the principal about a
suspicion my daughter had concerning her music teacher. The principal then
talked this over with the music teacher, indicating who had lodged the
complaint. Should I change schools?

Surrounded By Blabbermouths

Dear Surrounded ,

There are indeed loose lips around and they include those on
your own face. In the first case, the teacher clearly betrayed your confidence.
However, the teacher would have been in no such position had you not betrayed
your daughter’s confidence in the first place. Did you ask her permission
before entering into this discussion with her teacher? As for the second
incident, the McCarthy era is over; if you lodge a complaint against a teacher,
he must be permitted to defend himself. It may indeed be time for you to change
schools: Volunteer your hundreds of hours elsewhere and create a clearer line
between your life and your children’s. They, however, should remain where they
are happy — which is to say exactly where they are.

Money for Parents?

Dear Wendy,

My parents asked me to buy them a condominium in a swank
building. I can afford to do so (even though the amount is not pocket change to
me) but I turned them down. My parents have saved up all of their lives and
have put aside a sizable nest egg, and have the financial wherewithal to
purchase the apartment for themselves. Since I said no, I sense a distance
between us. I would help my parents if they needed food, clothing and shelter
even if I could not afford it, but last time I read the Ten Commandments it
didn’t mention that children are responsible for purchasing their parents a
condo in an exclusive high rise.

Daughter in Doubt

Dear Daughter,

Parenting isn’t an investment any canny broker would make:
it requires massive outlays, with no guaranteed returns. And at best, the
returns are intangible ones. Which is to say there is no obligation to buy your
parents a condo. There is an obligation to pay dividends in love and attention.
A gift certificate for regular visits to the condo your parents buy themselves
sounds about right to me.

My Kid Saw Me Lie

Dear Wendy,

Last week my 4-year-old caught me in a white lie. She
overheard me tell my sister-in-law that one of my children was sick and that we
would be unable to attend the family dinner. My husband finds get-togethers
with his family so stressful that I was doing him a favor by bowing out of the
dinner without hurting anyone’s feelings. I saved my husband, but I raised a
lot of questions for my daughter. Now what?

Pinocchio Mom

Dear Pinocchio,

I know there are many people who believe that lying of any
kind — even a smallish white lie — is unacceptable. I don’t happen to stand on
that side of the fence. Depending on how old your child is, I suggest you now
tell her as much of the truth as you feel she is able to understand. She isn’t
too young to hear that people sometimes beg off of invitations, even if she is
too young to hear that people sometimes beg off of invitations issued by their
own families. In the future, best not to use your own children as part of any
lie you may spin.

Should Mom Move?

Dear Wendy,

My ailing mother-in-law lives on the opposite coast from her
daughter, two grandchildren and me. We have been encouraging her for many years
to come live near us so that we can be together and she can enjoy her
grandchildren. She does not have close friends or established support systems
where she now lives. But despite our repeated efforts we have yet to make any
headway. How can we help her to make this transition? 

Long Distance In-Law

Dear Long Distance,

You want to be close to your ailing mother-in-law and want
your children to enjoy her company while she can still enjoy theirs. I have the
perfect solution: You and your family should move cross-country to be closer to
her. Some people might think that a major move — particularly in one’s old age
— would be difficult and disruptive, and would read your mother-in-law’s lack
of headway as a clear message. But not you. Since you don’t seem to think a
move is too much to ask — and since you do have youth on your side — you
relocate. If you are not prepared to call the movers, it may be time to accept
that long-distance phone calls are as close as you’re going to get to daily contact
with your mother-in-law.

Seeing Green in Israel’s Economy


Shlomo Eplboim sees green in the arid landscape that is Israel.

So confident is he of the Holy Land’s future that the 30-year-old financial adviser has helped launch a new mutual fund that will invest solely in Israeli high-tech, health care, biotech and other companies.

The Blue & White Fund, one of only a handful of United States-registered funds comprised exclusively of publicly traded Israeli stocks, appears to have won the Israeli government’s tacit support. At upcoming presentations in Los Angeles, Miami and New York, Israeli diplomats are expected to tell potential fund investors of their country’s strong economic prospects.

“We believe that when the war with Iraq is over, there’s a new government in Israel and stability in the region, the value of Israeli stocks will go up,” said Doron Abrahami, consul for economic affairs at the Israel Economic Mission of Los Angeles.

Yossi Shain, a professor of government at Georgetown University in Washington, D.C., added that Israel’s brainpower and the quality of its high-tech industries make it a good place to invest, despite the current problems.

However, some experts are less sanguine. They argue that Israel is a risky bet because of the intifada, the country’s sluggish economy and the looming United States-led war with Iraq that could destabilize the entire Middle East.

Blue & White “is probably not the fund you’d put orphans and widows into,” said Jeswald Salacuse, an international law professor and former dean at Tufts University’s Fletcher School of Law and Diplomacy in Medford, Mass.

Mutual funds made up of Israeli companies have struggled of late. The First Israel Fund, which came to market a decade ago, lost nearly 24 percent of its value in the first 101¼2 months this year. The AMIDEX35 Mutual Fund, a 31¼2-year-old fund comprised of the stocks of Israel’s 35 biggest companies, plunged by more than 34 percent. A sister fund of Israeli technology stocks closed in November due to investor indifference.

To be sure, most mutual funds have taken a beating. The nearly 8,300 United States-registered funds have lost almost $750 billion, or 11 percent, since the beginning of the year and now have assets valued at $6.2 trillion, said John Collins of the Investment Company Institute in Washington, D.C., a trade association for the mutual fund industry.

Israel’s economy appears to be among the most fragile in the industrialized world. That could make funds laden with Israeli stocks particularly vulnerable, experts said.

The International Monetary Fund forecast that Israel’s gross domestic product will fall by 1.5 percent this year, compared to an average gain of 1.7 percent for advanced economies. Inflation is expected to increase 6.2 percent in Israel versus an average 1.4 percent hike. At 10.7 percent, Israel’s unemployment rate is projected to be nearly twice as high as the 6.4 percent for first-world economies.

Eplboim, the highly charged chairman of Los Angeles-based Blue & White, said he understands the risks but remains a fervent believer in Israel’s future. Speaking fluidly with machine-gun speed, he rattled off a string of statistics that paint Israel in brilliant hues

In the past two decades, Eplboim said, the country’s exports have grown nearly 700 percent to $29 billion; Israel ranks just behind the Netherlands in education, with 20 percent of the population college educated; it has more engineers per capita than any other place on earth; Israel holds the third highest number of patents globally.

And then there are the companies, Eplboim said, his voice rising with enthusiasm. Teva Pharmaceutical Industries Ltd. ranks among the world’s biggest generic drugmakers, while Amdocs Ltd. is the global leader in cellular-phone software.

In Eplboim’s opinion, investing in Blue & White — so named after the colors of the Israeli flag — could boost flagging Israeli stock prices and possibly stimulate the economy. With higher share prices, Israeli companies would find it easier to borrow from banks, tap private investors and sell additional shares. Firms could then use that money to hire new workers, upgrade technology and improve operations, he said.

“Israel doesn’t need charity [as much as] it needs investment,” Eplboim said. “Investment creates long-term solutions.”

Cliff Goldstein, president of the AMIDEX35, said he expects U.S. Jews to rally behind his and other Israeli mutual funds. Recently, an elderly Pennsylvania woman told him she bought AMIDEX35 shares as a bar mitzvah present for her grandson.

“Because of the terror Israel’s been subjected to, Jews are starting to say, ‘Hey, I could invest in Exxon but why should I support the Arabs? Maybe I should look at Teva and Amdocs out of solidarity with my people,'” Goldstein said.

Don Cassidy, a senior research analyst for Lipper Inc., a Denver-based consulting firm that tracks mutual funds, said he could envision Jewish investors flocking to Israeli mutual funds, much as the American public bought war bonds during the Second World War. However, he questioned whether the Israeli funds can attract a major following outside the Jewish community, especially since investors have soured on the intentional market and grown more cautious in these turbulent times.

“It’ll be a little bit of an uphill battle,” Cassidy said.

Blue & White’s Eplboim appears ready to fight. He and other Blue & White executives have scheduled a “road show” early this month to tout the fund to such major financial firms as Merrill Lynch and Bear Stearns, as well as to potential Jewish investors. The first stop is Dec. 9 at the Skirball Cultural Center in Los Angeles. Visits to Florida and New York will follow.

To buy into the fund, individuals must pony up a minimum of $1,000 to open a regular account or $250 for an IRA, plus management and commission fees. Eplboim said he hoped Blue & White would hold shares in up to 40 Israeli companies and have up to $50 million under management by early next year. Eplboim Poutre & Co., a Los Angeles-based brokerage firm headed by Eplboim, and RAMCO, a Tel Aviv investment bank, serve as Blue & White’s management advisers.

Eplboim’s boosterism notwithstanding, his commitment to Israeli appears qualified. In the event of an economic, political or other crisis, Blue & White can pull completely out of Israeli securities and convert 100 percent of its holdings into cash or cash equivalents, according to a document filed with the U.S. Securities and Exchange Commission.

“We have lots of faith,” Eplboim said. “But we don’t want to be there like a sitting duck in case war breaks out or there’s a currency crisis, God forbid.”

Investors interested in learning more about Blue & White may attend a special Dec. 9 presentation at the Skirball Cultural Center, 2701 N. Sepulveda Blvd., Los Angeles, from 6 to 8 p.m.

Zvi Vapni, an Israeli deputy consul general, will speak about optimism amid Israel’s difficulties.The event is open to the public, and hors d’oeuvres will be served. For more information, call (310) 312-1755 or (866) 372-6326.

Gold’s Hot Tip:Invest in Israel


For people who like to make money — and who take the long-range view — now is the time to invest in the Israeli economy, despite the current situtation, according to Stanley Gold, president and CEO of Shamrock Holdings, the investment arm of the Roy Disney family.

For some time, Shamrock has been the largest private investor in Israel. With a new capital-growth fund of $170 million fully subscribed, of which $65 million is earmarked for Israel, Gold is looking for new opportunities.

"The combined effects of the intifada and the world recession have stopped the kind of Israeli economic growth we saw in the mid-1990s, and a lot of investors got scared and ran away," Gold says. "We look on this as an opportunity to buy at bargain prices and reap the rewards later."

Putting his money where his mouth is, Gold has invested $700 million to $800 million in Israel on behalf of Shamrock over the past 15 years.

Gold’s confidence in the basic soundness of Israel’s society and industry is based on three factors, which, he says, underlie all economic growth:

  • The intelligence and educational level of the population.
  • An incorruptible judicial system.
  • A modern, cutting-edge technology that yields world-class products.

Because Israel rates high in all three categories, its economy will come back stronger than ever, predicts Gold.

One of Shamrock’s first major investments was to buy a controlling interest in Koor Industries in the early 1990s, which was sold two and a half years later in 1997, resulting in a total profit of $130 million.

Currently, Shamrock has a 46 percent interest in Tadiran Communications, which makes military communication systems, with Gold as the company’s chairman. Shamrock holds 50 percent of Pelephone Communications Inc., Israel’s second-largest cellular phone service, and 10 percent of Paradigm Geophysical, a geoscience software firm.

The company’s extensive real estate holdings include a substantial interest in the new Tel Aviv bus station, which is being remodeled as a retail shopping center and transportation hub.

One project Shamrock is not into, despite recent reports in the Israeli press, is the development of a $135 million Israeli Disneyland. "That story was made up," Gold says.

Worldwide, Shamrock has invested some $2 billion since its founding in 1978, and its Israeli investment decisions, like all others, are based purely on economic considerations.

"I don’t have a job unless I make money for the Disney family and our private investors," Gold says. "My Zionist impulses have nothing to do with it."

Participation in a Shamrock investment fund is not for the average Joe Blowstein, with the minimum stake running between $5 million to $10 million.

Gold, the profit-oriented capitalist, is also a self-described socialist, and when a visitor questions the apparent contradiction, he quotes Ralph Waldo Emerson that "A foolish consistency is the hobgoblin of little minds."

He attributes his "philosophical socialism" to his parents, both good union members, and to growing up, 59 years ago, in South Central Los Angeles, when the population was one-third black, one-third Asian and one-third white.

"That [environment] was the best thing that ever happened to me," reminisces Gold, chewing on an unlit cigar while sitting in his sunny office in Burbank, a stone’s throw from the Warner Bros. studio lot. "I sold the old Los Angeles Mirror for 7 cents at the Coliseum, I got 3 cents per customer and a 1 cent tip."

He holds as his credo that society must provide a safety net for the less fortunate, and, even more importantly, a ladder to enable poor minorities to climb up into the middle class.

"If that doesn’t happen, if the gap between rich and poor keeps widening, then, ultimately, our society will be torn apart," he says.

Gold does not like to talk about his own community and charitable activities, but his support of the Hebrew Union College-Jewish Institute of Religion (HUC-JIR) is well-known.

He created a considerable stir in 1997, when as outgoing chairman of the HUC-JIR board he addressed the graduating class on the Jerusalem campus. In an impassioned speech, Gold warned of the danger facing Israeli democracy by the Orthodox insistence on dictating religious practice and he has since sought to "counterbalance this kind of poisonous attitude."

He is also recognized for his strong support of The Jewish Federation of Greater Los Angeles’ Tel Aviv-Los Angeles Partnership program, especially the three-month exchange program among Israeli and American high school students.

"This program gives Israeli youngsters a chance to witness the religious pluralism practiced here," he says. "They get the perspective that you don’t need to be a Chasid to be Jewish."

Given Israel’s current problems, Gold was asked what Los Angeles and American Jews can do to help the state.

"After 54 years, Israel has less need for charity and more for working partnerships on the economic, social, religious and cultural levels," he responds.

"If American Jews can find ways to participate on any of these levels, they will do significant good for the Jewish people."

Israel Bonds


Israel Bonds: They’re not just for bar and bat mitzvahs anymore.

That’s the message the State of Israel Bonds organization wants to get across in announcing its new floating rate offerings. Rather than being seen as a quasi-charity and feel-good gift for 13-year-olds, the organization wants to be considered a legitimate investment option.

It hopes to do that by adding the London Interbank Offer Rate (LIBOR) to its notes and offerings. LIBOR is a floating interest rate based on the average daily lending rates offered by several London banks. It’s considered a more international benchmark that takes global economics into account.

“It’s significant because, to this day, some people view Israel Bonds as a less-than-veritable investment, mostly because of a lack of knowledge of the bonds,” said a spokesman for Israel Bonds, adding that the addition of the LIBOR benchmark is “just another step” toward Israel Bonds being considered “a bona-fide investment option.”

The LIBOR-based instruments “will provide investment options that could better reflect the environment of the global market,” Gideon Patt, Bonds president and CEO, said in a statement.

Israel bonds are securities issued by the State of Israel to help build the country’s economy and infrastructure. Proceeds go to Israel’s treasury for general use. Historically, Israel Bond funds have been earmarked for projects such as highways and bridges. Current projects being used by Bonds money, a spokesman said, include water desalination and high-speed train projects.

“When you invest in Israel, you invest in the Jewish family business,” he said.

Still, they could make a respectable bar or bat mitzvah gift.

For more information, call the Contact Development Corp. for Israel at 1-800-229-9650, or go to www.israelbonds.com

This story was contributed by the Jewish Telegraphic Agency

Wall Street’s Wild Ride


The Los Angeles Times’ front-page article that reported the Aug. 31 stock market plunge referred to the drop as “a financial bloodbath,” then, a few sentences later, cautioned that the “tumble wasn’t a crash.” The following week’s edition heralded the biggest one-day point gain ever, which was erased over the ensuing couple of days.

With unpredictability the only certainty about the current market, opinions about the best course of action vary, but the consensus seems to be “stay the course.”

Most market analysts agree that the stock market drop was an overdue correction. “Stocks got higher and corporate profits were slowing,” explains Gail Ludvigson, senior vice president at Schroder and Company Inc., a Westwood brokerage firm headquartered in Britain. “That’s not a good combination.”

Political and financial instability in Asia, Russia and Latin America — not to mention anticipation of the Starr Report release — fueled the uncertainty, and the result, says Ludvigson, was that “it was time for a pause.”

“This is very normal when we have had the kind of upswings we’ve had,” says Steven Holtz, an independent certified financial planner in Westwood, who says this kind of correction normally occurs one in every three to four years.

Ludvigson, Holtz and others concur that, despite problems abroad, the U.S. economy remains strong. “The economy in our country is good. Companies are doing well. Devaluation is deceptive,” says Mark Levin, managing director for Imperial Capital, a Beverly Hills-based broker-dealer specializing in high net worth investors. Levin says that the decrease in valuation is inconsistent with current domestic trends, making this a good opportunity to buy.

Holtz agrees. “Things are going on sale,” he says. Investors who have a long-term time horizon can look at this as a buying opportunity because prices “will be higher in five years, and higher still in 10 years,” says Holtz.

The message is that investors should stick with their long-term investment plans, and not let market fluctuations drive their decisions. Analysts caution that each individual investor needs to look at his or her personal situation before determining the best course of action. Investment strategy should take into account the individual’s time frame for needing to have money in hand, tolerance for risk and ultimate financial goals. Investors with shorter-term goals, or those near retirement, would take a different course from those in for the long-term.

“Stay the course as long as you have good quality stuff,” advises Ludvigson. “This is the way you create real wealth.”

Holtz agrees. “There are two ways to protect yourself from the movement of the market,” he says. “Be invested for the long term… and develop an asset allocation that takes into account your long term goals and desires and your ability to handle volatility.” Holtz also suggests investing “across various asset categories,” — varying the mix of investment vehicles to include stocks, bonds, treasury bills, etc. — in order to minimize risk.

The danger with the kind of volatility we have recently been experiencing is the temptation for investors to try to make a quick profit, which analysts insist is a chancy business. Those who try “are the ones who come out losers,” says Eric Sussman, a faculty member of UCLA’s Anderson Graduate School of Management. “Stay the course. Invest for the long term. If you have a long-term perspective you’ll come out fine,” Sussman advises.

Holtz concurs. “For the average person to try to predict which way the market will go is a huge mistake. People with decades of experience have no idea which way the market will go,” he says. Ludvigson shares the same sentiment. Her advice: “Buy quality and hold a long time.” In addition to the inherent riskiness of trying to time the market, transaction costs and tax consequences make this strategy quite costly, Sussman cautions.

Although most investors know, at least in theory, that the market grows over time, it is sometimes difficult to translate that knowledge into practice when the market is behaving erratically.

“There is much emotion involved in the movement of the stock market,” says Holtz.

“The mentality is: Is this it or is there more?” says Ludvigson. “Any correction and people get fearful,” she says.

The recent ups and downs seem to have made many investors forget that the market is, at press time, about where it was eight months ago. “Things aren’t going badly. Just not as well,” reminds Ludvigson, noting that the market went up between 17 and 18 percent between January and July of this year. Now, “we’ve given that back,” she says. “Investors still have plenty of gains if they’ve been in the market the last five years,” she says.

Less Money, Less Giving?

Despite these gains, the analysts agreed that the market’s volatility would adversely affect charitable giving. Sussman felt there was “no question” that charitable giving would decline, noting that studies tie stock market movement with personal spending. “Uncertainty leads to inaction,” he says. “People will hold off giving… until the uncertainty passes.”

“When you’re worried about the future, you’re less likely to give,” Holtz says.

But Jewish Federation Executive Vice President John R. Fishel remains optimistic. “There are four months before the end of the year. A great deal can happen,” he says, noting that many donors have “made a lot of money over the last couple of years.”

When asked if she thought investors would be reluctant to part with disposable income, Ludvigson answered, “You bet. [There will be fewer purchases of] all the things you would think of as discretionary: vacations, luxury cars… “

“Personally, I’m not going to buy a new car,” says Levin, “I’d push that back one to two years.” But although Levin anticipates a “dampening on Rodeo Drive” due to lower spending by both domestic and Asian consumers, he notes that “in this city, people go overboard regardless of the economic cycle.”

According to Ludvigson, the thing to remember is that stocks have produced a 10 to 12 percent annual return on average over the last 70 years. The high performance that marked the last two to three years were an anomaly, but “people got used to it.” The S & P (Standard & Poor’s) 500 Index rose an average of 31 percent during 1995 through 1997, giving investors a false impression. “It started to look easy,” Ludvigson says.

Even though she believes we are in for “a period of sloppiness,” she projects that “probably the worst is over.”

So what’s a bewildered investor to conclude about the wild ride on Wall Street? That patience and a strong stomach pay off. As Ludvigson says, “In five years the market will be higher. Next week or next month is anyone’s guess.”

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