Aaron Katsman 58.
(photo credit: Courtesy)
If one had to create a poster boy for an Israeli stock, Teva Pharmaceuticals
would get the nod hands down. Teva is the world’s biggest generic-drug
manufacturer and is considered by many local and international investors as the
best Israeli stock to own.
As was widely reported in the media, Teva
shares plunged almost 15 percent over the course of a week, as news came out
that the company could potentially face a generic competitor to its highly
successful Copexone drug to fight multiple sclerosis. I guess what goes around
The fact is, it’s not just the recent drop that has worried
investors; since hitting a high in April, the stock has dropped more
This isn’t a research piece discussing the pros and cons of
investing in Teva stock; it’s a wake-up call to local investors to check
their Israeli investment portfolios have been constructed.
AS GOOD AS
GOLD For many local investment advisers, incorporating Teva stock into a
portfolio was a “sure thing.” Teva stock will never go down, was the
cry from these professionals.
(Sounds eerily like the Israeli real-estate
market, in which we are told it will only keep going up in value and you
lose money.) Don’t get me wrong, Teva has made many investors a whole
money over the long run. My problem is that it’s pitched by many
as a guaranteed way to profit in the stock market, and this is just
In fact, advisers who make the “guaranteed” claim are not only
completely misleading their clients, they are committing multiple
law infractions as well. No stock can ever be classified as a guaranteed
profit. Stocks are inherently risky, and investors need to understand
can lose some or all of their investment.
PORTFOLIO CONSTRUCTION I can’t
tell you how many times I have been shown investment portfolios crafted
brokers that have Teva stock as the entire allocation in the stock
is a legitimate argument as to the merits of a fully diversified
versus a more concentrated one, but no serious investment professional
you with a straight face to own just one stock. It’s unheard of. Well,
for in Israel, where it is quite common to say just buy Teva.
WHAT TO DO?
If you have a local investment portfolio, it may pay to seek objective
for its construction.
There are some licensed investment advisers who are
“fee-based,” whereby the client pays the adviser an hourly fee to
his entire investment portfolio. The adviser will analyze the stocks,
mutual funds that the client is holding, get a thorough understanding of
client’s risk profile and short- and long-term goals, and give objective
on the holdings. Because such advisers are being compensated by an
they can be expected to have a greater degree of objectivity.
ADVICE Because fee-based advisers are being paid at an hourly rate, the
benefit is that they can provide objective advice: They are better able
at your entire financial situation without being swayed by any personal
that may come with giving certain recommendations.
For many English
speakers, dealing with a Hebrew-speaking adviser is a lost cause, and
even bother. They are at the complete mercy of the Israeli adviser and
little or no input into the make-up of their portfolio. By working with a
fee-based adviser who understands local markets, investors can
is in their portfolio and retake control of their financial
Don’t stay passive and fall for a “sure thing.” Take control
of your local investments and make sound judgments that may benefit your
portfolio in the long firstname.lastname@example.org Aaron
a licensed financial adviser in Israel and the United States who helps
open investment accounts in the US.