Although Israel's likely membership in the Organization for Economic Cooperation and Development will encourage an increased inflow in foreign investment into the country, Bank of Israel Governor Stanley Fischer said Wednesday investors also must be aware of the risk given that capital markets do not always rise. "Capital inflow into the Israeli economy in 2006 totaled more than $23 billion, that is 15 percent of GDP, which is a tremendous amount in international terms. The process of Israel joining the OECD should also encourage this trend in coming years," Fischer said at the The Marker Annual Capital Markets Conference in Tel Aviv. At the same, however, Fischer cautioned that the changes and reforms in the capital market and financial markets imposed an increasing responsibility on investors over their financial decisions. "All those investing in financial assets - particularly shares, corporate bonds or foreign currency -surely know how important it is to be aware of the various risks. In other words: prices can go down as well as up," said Fischer. Investors, perhaps needed such a reminder as the Tel Aviv Stock Exchange and other global markets trade not far from all-time highs. Regarding the foreign exchange market, for example, he said it was very difficult to predict future movements of the exchange rate, and as in every other financial market, prices there can also go down as well as up. He added, however, that globalization demanded that the markets be left to function, and to intervene only in extreme circumstances of crisis or market failure. "Here in Israel, we are far from such cases," said Fischer. The governor also stressed that budget discipline must be maintained when drawing up the government budget for 2008. "As you know, the markets react, sometimes quickly, to governments that do not maintain budget discipline. This discipline should be maintained, too, when drawing up the government budget for 2008 and for the years after," said Fischer. Furthermore, Fischer noted that the new reality on the capital market was reflected in the fact that Israelis were investing abroad in significant quantities as part of their policy of spreading risk in the era of globalization. The proportion of tradable assets in the public's monetary assets portfolio, increased from 34 percent in June 1995 to 52% in March of this year. The share of Israelis' assets abroad also grew in this period, from 1% of the total portfolio to 8%. Also speaking at the conference, economists and financial market experts revealed how they diversified their own portfolios to spread risk, in particular regarding the proportion invested abroad. Shlomo Maoz, chief economist at Excellence-Nessuah, said that one-fifth of his portfolio was placed in foreign securities, while Igal Brightman, chairman of the Deloitte Brightman Almagor accounting firm invested 50% of his assets abroad. The head of the Bank of Israel's Monetary Department, Akiva Offenbacher, said he placed all his eggs into Israeli securities and Vered Dar, the chief economist at the Psagot Ofek investment firm, said that two-thirds of her personal portfolio consisted of foreign shares.