Comment: Halutz's stocks wrong target for critics

By SETH FREEDMAN
August 16, 2006 23:18

 
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"By placing that phone call to his broker... he betrayed that sacred trust." "How can he ever look in the eyes of the parents, spouses and children of the fallen?" You'd think, from the melodramatic rhetoric above, that Lt.-Gen. Dan Halutz spent most of the war frenziedly trading the stock market. You'd think that he was tracking the graphs of the indices with more zeal than he was tracking the advance of his troops into Lebanon. You'd be wrong. If the reports that have emerged thus far are accurate, then the whole "Chief of the General Staff - Share Selling - Resignation Imminent" storm in a teacup boils down merely to this: July 12 - Two soldiers kidnapped by Hizbullah in the morning. July 12 - Halutz calls his broker at noon and instructs him to liquidate his portfolio of stocks. July 12 to August 14 - Halutz dedicates all of his time to military operations in the conflict. It is interesting that no one complains about the time Halutz spent eating meals during the war, kissing his wife and kids or sleeping - all fairly time-consuming activities, compared with a 30-second phone call to his banker. We do not begrudge him these human functions, so why do his private investments cause such uproar? Jealousy, I'd suggest. Jealousy, and a clutching-at-straws type desperation from a public angry and confused that the war didn't pan out quite as they'd expected. If Halutz's strategy and tactics during the month-long battle were questionable, then the public has a right to complain and, if the powers-that-be are in agreement, then his position would become untenable and he would leave his post. However, if - as it appeared until these "revelations" - Halutz was unlikely to have to fall on his sword for military reasons, then this trumped-up set of accusations is totally unwarranted and misguided. It seems as though those who want him out of office as a scapegoat for the "failed" operation could not achieve it through fair means - investigating his handling of the war, finding him lacking in skill, firing him - due to lack of support in the cabinet, and thus are using underhanded measures such as his personal finances to try and topple him. I was a stockbroker for six years in London, and can safely say from personal experience that nothing causes more stress to a trader or investor than his open positions. That is to say, any trade that is open (i.e. shares bought and not yet sold) can cause sleepless nights, tension, distraction and doubt to even the most seasoned professional. Therefore, Halutz's decision to cut all his positions in one fell swoop strikes me as a noble, clear-the-decks approach. Instead of having nagging doubts in the back of his mind throughout the war of how much his Teva shares were down, or whether his Bezeq bonds would recover, he just scythed the lot right at the start of the conflict. And, I should point out, took a 17 percent hit on his trades by doing so. If he had taken new positions when the war broke out, then it would be a different matter. For example, had he sold short of the market, anticipating a lengthy war which would hammer the index (as al-Qaida linked financiers allegedly did before the 9/11 attacks), then he would not only be guilty of profiteering from the fighting, but also his integrity would be called into question - he could have been accused of prolonging the conflict for personal gain, and so on. But, as we know, he didn't. He also didn't keep running back and forth to his laptop to check the latest prices. He just called, sold and got back to running the army. (While he has since maintained that when he sold his shares he did not know a conflict was about to begin, it is hard to fathom that the head of one of the world's best armies did not realize what the consequences would be of a cross-border raid and kidnapping.) And, truth be told, I have more confidence in him as an intelligent leader upon finding out that he knows how to trade. Only a complete amateur would not sell all their long positions in Israeli stock on the day a war broke out - the index was only ever going to go one way while the war was in its infancy. Markets hate uncertainty, and the outbreak of war is as uncertain a time as any - so he was smart, and correct, to sell when he did. Which is where my point about jealousy comes in. The Israeli public, like the British public I grew up with, seems to seethe with self-righteous rage whenever a politician (or senior military figure) is seen managing their own investments wisely. Lord Levy, for example, was hounded relentlessly for (legitimately) only paying 5,000 in income tax in 1998, despite being worth tens of millions of pounds. Halutz's trading was also entirely above board, since he is not prohibited in any way from having private investments and deciding when to buy or sell them. So, to attack him for doing just that smacks of jealousy to me. "Look at him, with his stock portfolio, and his fancy house," cry the masses. Well, it was only NIS 120,000 worth of shares - he's hardly up there with the Arisons. And, even if he was, his personal finance is totally irrelevant when deciding whether he is fit to do his job competently. If he's a first-class chief of staff, then he stays. If he's not, then he goes - how market-savvy he is is of no importance at all. The worst aspect of the whole witch-hunt in the Israeli media is the linking of his share sale to the deaths of over a hundred soldiers in the war. Comments such as those at the top of the page - "…betrayed the sacred trust" and "how can he look parents in the eye?" - are way out of line, and do an injustice to the fallen fighters themselves. It is abhorrent to suggest that one - just one - brief phone call to his money manager, during over a month of hostilities, somehow contributed to the heavy losses suffered by the IDF. Blame will certainly be dished out over the coming months, but there are far better targets to receive it. Start, for example, with the Finance Ministry which slashed defense spending, resulting in the military canceling training exercises for reserve units, which in turn led to many of those drafted not having trained for over three years before being rushed across the border. That's shocking. That's worthy of indignant wrath. Halutz's loss-making share sale doesn't even come close.

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