‘Mazal tov!’ There’s lots of cheering and clapping as the five people
at the table congratulate the sixth on the birth of a new baby and
start plying him with $100 bills.
But after the glow and
excitement fades, the new parent is going to have to face facts: That
new baby is an additional expense, and he’s going to have to figure out
how to stretch his policeman’s, teacher’s or clerk’s salary to cover
it. Or maybe he’ll try to increase his income by looking into some
investment opportunities that have come his way – if he can figure out
how to invest without losing his shirt.
Okay, so the baby isn’t
a real baby, the money isn’t real money and the investments aren’t real
investments – at least not yet. It’s a game called Cashflow 101 that
was developed by US entrepreneur Robert Kiyosaki to teach financial
literacy, and if you’ve ever played the game Life, well, it’s basically
Life writ large.
Investments? Who, me?
You're never too young
Cashflow 101, which first appeared in 1996, is
played all over the world, and the instruction booklet Kiyosaki wrote
for it later evolved into the international best-seller Rich Dad, Poor
Dad, which promotes financial independence through investments in real
estate and businesses.
For many players the game is an
eye-opener, leading them to realize how little they know about managing
their own finances, let alone about the world of business and
But the games that take place weekly in classrooms
in Tel Aviv, Jerusalem, Haifa and Rishon Lezion are not meant merely to
educate. They are a marketing tool used by Cashflow College to motivate
players to take one of its 20 courses in capital markets investing,
real estate and entrepreneurship.
The six-year-old Cashflow
College is only one of many institutes around the country offering
courses in what is known in Hebrew as haskala financit, financial
education. Through whatever investment vehicle one chooses to explore,
the courses teach how to put one’s money to work to maximize returns –
whether the aim is to meet looming family expenses, augment a pension
after retirement or simply have a stream of income other than a salary.
courses, which cost NIS 2,000 and up and can last from six weeks to six
months, are given in community centers, offices and “colleges,” that
are not academic institutions, nor do they pretend to be. On the
contrary, the instruction is strictly how-to, with just enough theory
to understand why.
The courses I checked out – hardly an
exhaustive sample of what’s available – seemed thorough, and none of
the instructors or administrators who spoke to The Jerusalem Post
sounded like snake-oil salesmen; they are knowledgeable in their fields
and some are media commentators and columnists in the financial press.
The students who agreed to be interviewed – who ranged in age from
students to pensioners – seemed satisfied, though not all of them had
as yet gotten up the courage to invest.
All courses described in
this article are given in Hebrew, but those who prefer studying in
English need not despair: Jerusalem’s Lander Institute runs an
investing and finance course for English-speakers, given by Douglas
Goldstein, director of Profile Investment Services and author of
Building Wealth in Israel. The latest session of the course, which
costs NIS 2,400, opened on Sunday.
All the course purveyors
promise as much hand-holding and mentoring as you might need, both
during the courses and after they’re over, by phone, e-mail, electronic
newsletters, Facebook group or their Web sites, which provide endless
reams of information.
And all these places offer introductory
sessions that not only explain what the courses are about, but leave
you with some investment tips. The aim, though, is spur you to sign up
to learn more.
THERE ARE rules you can learn to navigate the
market confidently, so you can earn money while minimizing risk, says
Yisrael Morgenstern, chairman of the investment committee at Big
Capital Investments and the academic coordinator of the market
investment curriculum at the Herzliya-based Mercaz Lehascala Financit
(Financial Education Center – FEC), which also gives courses in Tel
Aviv, Ramat Efal and Haifa.
“The stock market is not a casino,”
says Morgenstern. “It’s an opportunity to be a partner in a company.
Sometimes these partnerships cost more money, sometimes less. Before
you become partners with anyone, in any business, you check the
“If you know how to read a financial
statement, to evaluate a company’s worth, to know who its competitors
are and what they are making, and if you can see that the management
knows what it’s doing, over the long term [the stock] should go up.”
is a division of Matrix, an information technology company that owns
several education and training programs, including John Bryce, the
Hi-Tech College, and Israeli Management Center. FEC gives a range of
market investment courses, from a 17-week course (NIS 5,150) that
covers the investment basics, to more advanced courses in technical
analysis, options and foreign currency. The courses also teach
strategies and how to use the various computer programs needed to
Morgenstern is the primary lecturer in the basic
course, and a couple of times a month holds a “trading room,” open to
both current and former students, where he does a market survey,
evaluating what investments participants have made or are considering,
and dispenses some investment advice.
Speaking to the Post after
one such “trading room” session, Morgenstern notes that nearly all of
the two dozen people who had attended had known virtually nothing about
the markets before taking his courses.
G.S., 60, of Ramat Gan,
who had 37 years’ experience as a hi-tech executive, already had a side
income from real estate investments but decided he’d prefer to
diversify and learn to invest in the stock market, about which he
admits he knew nothing.
Since last July, he has taken several
courses at FEC – Morgenstern’s as well as several advanced courses –
and has started investing small sums.
“I believe that it’s
important not just to learn things, but to try them, and I’ve even seen
some profits, but I wouldn’t consider myself an ‘investor’ yet,” he
says. “That will take a lot more practice.”
Naomi Katznelson of
Givatayim admits that she didn’t know anything about investing before
taking FEC’s basic course last year. She hasn’t made any investments
yet, and though she comes regularly to the “trading room,” to view the
practical applications of what she learned.
“I come to the trading room and I hear things repeated, and repeated again, and I’m catching on,” says Katznelson.
teach them different methods, but we also teach them rules, which they
are meant to follow, which keeps students focused,” explains
Morgenstern. “We don’t want them to sit on the computer the whole day,
or even every day; we want them to check on their portfolio every
couple of days or even once a week.”
Like all thorough courses
on the capital markets, Morgenstern teaches students how to make money
when the markets go up or down. But his investment focus is decidedly
medium- to long-term; otherwise, he says, playing the market is indeed
“Whoever tries to bet on whether the market will go up or down tomorrow indeed turns it into a casino,” he says.
BARAK emphatically disagrees. Trying to hold stocks for the long term
is more dangerous, he says, because every few years there’s some kind
of crisis that sets the market back, and one may not be able to recover
“When I make a profit I sell, because I have no clue
what will happen over the long term,” he says. “There’s nothing better
than putting money in your pocket.”
Barak, a former hi-tech
executive who founded Tradenet in 2004, is a day trader, playing the
New York Stock Exchange and the Nasdaq exclusively. This is because the
volume and technology of the US stock markets make it much easier – and
safer – to trade successfully, he says, and commissions are far lower
than on the Tel Aviv Stock Exchange.
Moreover, people on this
side of the ocean have an advantage, since due to the time difference,
they can trade in the evening, after work.
Barak bounded into a
recent introductory session in Jerusalem looking pretty proud of
himself. It was the evening of Monday, May 10, the day that the EU had
announced its trillion-dollar euro-zone bailout plan.
that such a plan would be announced, he had taken various stock
positions on Friday, and sold immediately on Monday when the US markets
started zooming up as trading opened. He had made $32,000, a personal
“Traders love volatile markets,” says Barak. “We
love crises. Because during crises, we can predict how the public is
going to act. And when the public is predictable, we make money.”
12-week course (NIS 6,000), given in the central region, Haifa,
Jerusalem and Beersheba, teaches stock analysis, strategies and how to
use the relevant computer programs. Its very sophisticated Web site has
its own on-line “trading room,” where for a monthly fee, one can listen
in on analysts as they make their recommendations and ask questions.
also makes his own weekly recommendations, which if followed, Tradenet
claims, would have netted investors a return of 7.2% a month over the
past two years.
Students can train on demo programs for free,
but to open an account at the brokerage firm affiliated with Tradenet
requires at least $3,000, with the broker allowing students to buy
stock worth up to four times as much on margin.
At the introductory session, Barak made it clear that success as a day trader is as much about psychology as about money.
the purpose behind what he calls his “3 by 3” rule: if a stock you buy
goes down by 3 percent, you sell – no matter what. If it goes up by 3%,
you sell three-quarters of your holding and let the other quarter ride,
but then sell that – no matter what – if it sinks back down to what you
paid for it.
It seems a simple enough strategy to implement, but apparently it isn’t.
don’t like this rule, because the desire to go out and tell your
friends that you made a killing is too great.” he says. “To sell at 3%
[profit] is a battle – a battle with yourself.”
most significant about the rule, though, is that it prevents you from
losing much money by stubbornly holding on to a bad stock in the hope
it will go up.
“That’s what most people do, and that’s where the
problems lie,” he explains. “Even when a stock plunges, people tend to
say, ‘If I haven’t sold it, I haven’t lost anything.’”
Barak continues, as the stock drops further, people sometimes increase
their stake. “You tell yourself, ‘It’s a good stock, it’ll come back.’
Once in a while that will work. But it’s only a matter of time before a
stock doesn’t come back, and you’ll get a slap that you won’t recover
THE NEED for discipline in investing is one reason why
both instructors and administrators say they would like to see more
women – now only about 20%-25% of the students in their courses.
think women are better at market trading than men,” says Geva Gazit,
who teaches a course in day trading of futures contracts for Cashflow.
don’t have an ego. Men have an ego, they think every trade is a war
between them and the market. They have to win in every transaction, and
they end up losing a lot of money.
“Women are a lot more rational. If something’s not working, they just close it up and start with something else.”
five-session course (NIS 2,450) teaches the techniques and the program
associated with futures contracts, and requires students to practice on
a demo version of the program, which they can get for free for a few
weeks. But his trading model also imposes a degree of discipline.
minimum required to open a brokerage account for the Chicago Mercantile
Exchange, where one can trade in both commodities and contracts linked
to various financial indices, is $5,000, and he wants his students to
make do with making $100 a day. Then they are meant to turn off the
computer and forget about it.
During a demonstration on his
laptop, Gazit put in a buy command for a Standard and Poor’s-linked
contract, then sold it for a $50 profit. It took about 30 seconds.
hundred dollars a day is nothing to someone who’s in commodities, it’s
ridiculous,” he says. “But if there are 20 or 22 trading days a month,
that’s around $2,000. On $5,000, that’s a return of 40% a month. Where
else can you get a return like that?”
Gazit came to market
trading from a totally different place: His field was wellness
promotion – smoking cessation, nutrition and the like. He got into
trading seven years ago because he understood that his savings were not
getting the returns he wanted.
“I took a basic course in
futures, but most of my studies were trial and error in front of the
screen,” he says. “I teach these courses because I know that I went
through a process – I had no financial or business background or degree
and I succeeded; there’s no reason that anyone can’t succeed.
I don’t teach people how to make millions. That doesn’t interest me.
People can and do, but that’s not what I teach. Take an hour or two a
day, go into this market that turns over trillions of dollars every
day, and take a little piece. That little piece can be a very nice
income, when you take into account the effort and expense you would
have to put into it.”
Dale Baranowski, a sound engineer from
Gush Etzion, is still practicing. After taking Gazit’s course in the
fall, he recently opened the $5,000 brokerage account so that he could
get unlimited access to the demo program, though he hasn’t made any
investments yet. His simulations, “playing with Monopoly money,” as he
put it, have been mostly profitable.
“This is the first time I
ever attempted anything like this,” Baranowski says, adding that he was
very impressed with Gazit’s approach to investing. “He gave us a
realistic appraisal of what we could and couldn’t expect to accomplish.
He wasn’t out to impress anyone.”
Both Gazit and Tradenet’s
Barak refer to day trading as a “profession,” but neither believes that
students should aim to quit their day jobs.
“In this economy,
everyone could use a second profession,” says Barak. “As far as I’m
concerned, there’s no better profession than one in which you can hook
up to the Internet in Thailand and make money.”
If you look at
capital market investing as a business venture, Gazit says, it is one
of the few businesses you can actually get some practice at, using demo
programs, before making more than a minimal investment, if any.
that’s a relatively recent development. These types of courses would
not have been relevant even 10 years ago, when real-time access to
market information cost thousands of dollars, putting it out of range
Now, anyone with a fast Internet connection can
play the market on his own. Almost all the programs are either free or
available at minimum cost, supported by banks or brokerage houses or
other commercial entities. Research is much easier, assuming you can
understand the information, and the ability to program in buy and sell
commands means that your portfolio can be adjusting itself even if
you’re nowhere near a computer.
Independent investing in the capital markets without any training, however, is still risky.
invest on your own, you need three things: Time to do it, the talent
and understanding of the markets, and a temperament not subject to
emotional swings that can mess you up,” says Lander’s Goldstein.
the end, a lot of people who try it themselves end up coming to learn
it,” says FEC’s Morgenstern. “They make so many mistakes and lose so
much money that they decide it’s worth spending NIS 4,000 to NIS 5,000
for a course to learn how to do it properly.”
NOT EVERYONE who takes these courses will actually invest, which seems to genuinely pain Cashflow chairman Shai Baaton.
write that they enjoy our courses, and that’s fine, but we’re not a
theater, that they should come, enjoy the performance and go home,”
Baaton says. “I’d prefer to think that people apply what they learn
here, that they take it further.
He believes his courses offer more than just a way to make money.
“Of course, our students learn how to make money, but just as a way to
achieve something beyond,” he says. “They want something of their own;
they don’t want to feel that all they’ve accomplished is through their
job and if they don’t have a job, they aren’t worth anything. That’s a
feeling of dependence, of enslavement.”
In an era in which Icelandic volcanoes, binging Greeks and
irresponsible American bankers can affect jobs and savings here, the
money generated on the side certainly doesn’t hurt.
“I believe in freedom more than I believe in money,” says Baaton.
“Money is just a tool, it’s never the end in itself. I think that what
we are selling is freedom, in the form of financial independence.”