Why did ordinary, non-professional investors suddenly flood into the Tel Aviv Stock Exchange (TASE) in the second half of 2025?
Because by then, the headlines were irresistible. The TASE 125 index had surged an eye-catching 24% in the first half of the year as foreign investors poured billions into Israeli equities. By year-end, the index was up over 50% and some $26 billion of Israeli shares were held by the investing public. It felt as if everyone was talking about the market — and everyone, it seemed, was making money.
If we go back a year earlier, the TASE’s 2024 year-end summaries were already impressive, with leading indices up close to 26%, outperforming most global markets. By comparison, the S&P 500 rose a very respectable 24% that year.
Still, few foresaw the magnitude of what would follow in 2025. The truly astute investor would have begun accumulating Israeli equities back in 2023, when the outlook was bleak and the market was underperforming.
So why did the market only become “fashionable” in 2025 — when much of the early upside had already been captured?
There are a few reasons that people might cite:
- The intensity of the war against Gaza had passed, for the meantime, restoring a sense of optimism about investing in Israel.
- The stock market in Israel announced that it was moving to trading from Monday to Friday, in keeping with global markets, which makes it more attractive to foreign investors. Previously there was potentially only a 3-day overlap of trading with the American markets because of the different time zones, leading some international investors to avoid our market.
- Israeli Investors began to see the negative impact of their investments in the US markets, as the strengthened shekel eroded dollar gains in shekel terms.
However, to my mind, the real catalyst is that investors heard about the excellent returns that their friends, neighbors, and seemingly everyone apart from themselves, were earning in the Israeli market. They were driven by FOMO (fear of missing out).
I think of those people as the ones who just come late to the party, as they often come in at the end of the investing cycle. The average investors don’t analyze and research forward-looking trends, they follow the crowd. And they join the party when it is already in full swing.
Catching the Last Best Thing
This pattern is not unique to the stock market. About two or three years ago, a client, who had invested his money with us for a couple of years, contacted me. His portfolio had been doing okay, not great, but he was ready to try something different. He explained that they were going to go into residential real estate, and buy an apartment. They had been hearing for years about the upside profits potential, and they decided to take the plunge and buy an apartment on paper. The residential market had been showing 4-6% gains annually for more than a decade.
However, since 7th October there has been a significant slowdown in residential real estate. The kablanim (building contractors) started offering additional extras, and deferred payment terms to try and encourage new buyers to commit. But for the most part, sales have been disappointing with inventory of unsold apartments growing to all-time highs and lower overall prices in the residential market.
This unfortunate situation is a variation on the same theme – joining the real estate investors at the end of the market cycle. People were convinced that real estate prices would continue to grow at similar rates. But investment markets go in cycles. Knowing when to join the party is not always easy.
Timing the Market
At heart, these decisions reflect an attempt to “time the market” — something that even seasoned professionals struggle to do consistently. Accurately predicting peaks, troughs, and turning points across multiple asset classes is close to impossible.
Lay investors face an additional challenge. Lacking either sufficient capital or the discipline to diversify properly, they often concentrate everything in a single asset class. When enthusiasm fades, they exit abruptly — only to chase the next “can’t-miss” opportunity, again without necessarily performing adequate research. This market timing is not easy. Creating a diversified portfolio with exposure to different asset classes and geographic locations is a safer option and, while less exciting in many ways, it will nonetheless give the average investor a better opportunity to produce consistent gains. Investing in the TASE, as part of this strategy, is likely to produce excellent long-term results by avoiding the need to market time.
At Labinsky Financial, we help clients turn financial stability into lasting peace of mind. By focusing on sustainable lifestyles, disciplined saving, and long-term planning, we guide clients toward financial happiness that is built to last. Our approach goes beyond numbers, helping individuals and families align their spending, saving, and investing decisions with what truly matters to them, so they can enjoy both today and the future with confidence.
Arriving to the party on time
Most highly speculative investments will not achieve the desired results without a diversified, long-term investment plan. That doesn’t mean that you can never change your portfolio, or direction. It simply means that all changes need to be part of the bigger, long-term picture, and that flipping from one ‘amazing investment’ to another, needs to avoided. Arriving at that party late in the evening, increases your chances that the music is already winding down.
Baruch Labinsky is the founder of Labinsky Financial, specialists in budgeting, retirement planning, investment management and pre- and post-Aliyah financial planning. Licensed by the Israel Securities Authority as a portfolio manager, Baruch specializes in working with olim who are looking to grow their wealth successfully, and is the author of the olim’s ‘bible’ “A Financial Guide to Aliyah and Life in Israel”. For a meeting regarding your finances and/or investment management please contact Labinsky Financial on 02 9910029 or email [email protected]