Teva: Stop 'Tucking These Away'

11/9/17

I've only been following the Teva Pharmaceuticals (TEVA) saga since the early August crash caught my attention, but in every article I have read the comments section has a good few advocating buying shares at today's prices and 'tucking them away'. The rationale seems to be even if you buy early, holding TEVA for the long term will eventually pay off.

Now I'm not going to say this categorically won't work. At some point TEVA will find a bottom and recover, but in my opinion this is a very risky, almost kamikaze approach to investing.

The problem is TEVA could drift lower for years to come. Cost cutting, slashing the dividend, selling assets and amending debt covenants aren't a quick fix. Buying for the long term while all this happening, and while there is plenty potential for more bad news to come - for example removing the dividend completely, or a debt downgrade - seems foolhardy.

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