I am currently sitting on an EL AL flight returning from a week abroad, and reflecting on my impressions of the trip. What stands out is a meeting I had in London with a manager of a large UK property fund. He described to me in detail his understanding of the ramifications that the US subprime fiasco has had on UK property valuations. At the end of the discussion, I realized how these issues are impacting on each of our financial affairs. The topic of the subprime mess has been the subject of many recent media articles, and I am not going to detail it in this article. But I will try to explain the knock-on effects this may have for my readers in Israel, and try and identify opportunities arising from the situation. The obvious effect has been that there is an over-supply of residential properties on the US market. It is now harder for an owner of a US property to sell and receive the price he might have gotten a year ago. I believe a lot of the price rises in Anglo-desired residential property markets in Israel in recent years - such as Jerusalem, Netanya, Ra'anana, Modi'in and Ramat Beit Shemesh - was fueled by buyers who had sold overseas homes for record prices. Some of these areas have become unaffordable for first-time home buyers. If the upward pressures in these markets reduce, it will present buying opportunities for prospective home buyers to get on the property ladder in the community of their choice. Despite the efforts of the US Federal Reserve, worldwide banks and other lenders are panic-stricken, and have frozen new lending. This has further reduced worldwide property markets, as credit is difficult to obtain. However, Israeli mortgage banks have traditionally been very conservative in their lending policies; it is no harder to get an Israeli mortgage than it was before. Thus, the Israeli property market should not be negatively affected due to the worldwide credit crunch. An area of great concern is that the US may be entering a period of recession, which will mean a slowdown of the economy. This is obviously not good news for anyone. It may mean the loss of many jobs as US companies look to cut expenses. In such a scenario, people with good skills may find that there are opportunities for subcontracting. As has been seen before in Israel, English-speaking ex-pats are prime candidates to provide these services; today, with modern communications, distance is no barrier. From an investment perspective, I see opportunities arising over the horizon. To take a counter-cyclical view is traditionally where there is money to be made. US and UK property funds, and real estate investment trusts (REITS), have been badly affected by the negative market sentiment; they are actually trading at a discount to the underlying property values, which themselves are depressed. Since these funds are asset-backed, in time the intrinsic value has to realized. That will present a buying opportunity for those investors who have the vision and time horizon to benefit from this potential. A good way for an investor to access such opportunities over time is called dollar-cost averaging. This is where a person puts away a fixed monthly amount into investment funds. As the unit price goes up and down over time, the investor is able to achieve an "average" purchase price; short-term weakness is actually a benefit, since it enables the investor to purchase at lower prices, and this benefit will be amplified over time as there is a growth in the investment. It is said that every cloud has a silver lining. It is up to us to find opportunities that present themselves, especially when things seem so bleak all around. Utilizing such opportunities as they arise can make a big difference to our financial situation in the long run. [email protected] Philip Braude is an accountant, personal financial planner and licensed investment marketer. He is CEO of Anglo Capital Limited.