 Good day, fellow investors. Today I want to share with you my two latest financial mistakes. I will discuss what I did, why I invested and where I was wrong. I think it's essential to always look back at your investments and your investments mistakes. Because when you analyze the mistakes it could prevent you from making further mistakes in the future. So this video will also be a guidance for me not to make financial mistakes anymore or not to make that kind at least of financial mistakes. If you have made any financial mistakes in the past, please share them below in the comments. We can only learn from such shareings. This would be probably the best way to learn. So please share with us in order to enrich our knowledge and hopefully enable us to make glass mistakes in the future. As you probably know I don't make that many investments over a year. If I buy one or two stocks over a year I'm not happy. When I exaggerate, when I start buying three or four stocks in a year then it usually comes out as a mistake. So let's see what were my two latest mistakes. The first mistake I made, the last one and probably the most recent one, very discussed, very notorious is Teva Pharmaceuticals. This was Teva's stock price when I analyzed the company in order to see if it was a buy. You can see how I saw okay there were two peaks, there was a bottom range and then again the price was close to these historical bottoms. This gives me okay. It could be that the stock price will be at its lowest. So from a value perspective, fundamental perspective, I thought it was a buy. Of course I'm not buying on a technical reason ever, but I'll show you my fundamental analysis. Checked the company, the revenue breakdown, the guidance was positive, the Octavis acquisition should bring more revenues and synergies. But that was one point. Revenue, geographic diversification, mostly in the US, Europe, rest of world. What the Octavis acquisition brought was one of the largest generic pipelines in the world. So many more drugs coming online which should have brought the benefits to Teva. This was also one reason for the acquisition different geographic footprint. So now it could be synergized by selling all over the world different drugs. Then many thought that Teva paid too much for the acquisition and that's what sent the price down. Teva issued 25 billion of debt, used 8 billion of its own cash and diluted shareholders by 10%. Of course when Teva's stock price was at 55, 60, now then I can understand that they paid too much. Now that the stock price was 30, I thought okay, debt acquisition is calculated in the price if it was overpaid. Then I looked from my fundamental base, when is the debt due, what is Teva's expected free cash flow and what is the potential that the dividend would be sustained. Here was my first mistake, Teva's cash flow came in at 4 billion for this year, so it won't be 6 billion or 5, 6 billion. So if you put this line lower you see that there won't be any more dividends, but Teva will probably stay alive as it won't go bankrupt. That easily, especially as it has low debt repayments for example in 2022 or still 2018, 2 billion, 3 billion. So they will be able to cover that, but the dividend is probably gone. The plan was to repay the debt. Of course the last news destroyed that plan, but still Teva will try to repay with the free cash flow. They are still very free cash flow positive. I even looked at the management's 2009 projections to see how accurate they were in the projections and in 2009 they were pretty accurate for the next three years. So I thought okay, management what they say they actually do, I was wrong there. I looked again at Teva's estimates for 2015, how much wrong they were, was there a problem, free cash flows pretty correct, long-term projections, what are they going, how much money are they going to make per share, was again very very positive. From the fundamentals I switched to a pharmaceutical market outlook, looked how the healthcare ETF stopped growing suddenly because of all the issues with generic pricing. Nevertheless I saw that the market continues to grow, the demand for pharmaceutics continues to increase, so that was a bonus. What I especially saw is that people around the world and that was unfortunately some even happy that I lost because I invested in a negative karma stock, people around the world are unfortunately getting more and more sick and they need more medicine. So that's an ugly thing to invest in, so good for you that you lost your money. On top of the growth in the world people are aging, more medicine, more medical attention, more whatever and people want cheaper drugs and generics are usually much cheaper than the branded counterparts. Generic, the fastest growth in the last 10 years at more than 10% per year and expected to continue to grow that fast. What happens when a patent a company has on a drug expires, well you can see how fast that brand loses its market share to generics and that's what's happening to Teva's Copaxon when they use their patent. Nevertheless I looked there are many patent explorations, there will be more business for Teva, prescription sales drug growth is also expected to grow and Teva is the leader in the generic market. I even made a table with analysis of Teva compared to Pierce which is the best pharmaceutical company to be exposed to pharmaceuticals because pharmaceuticals don't fall that much in a recession. Price to cash flow yield was here from Teva and Teva had this dividend of 4% which was very attractive. Depth to equity again my mistake 1.05 because the equity was intangibles which they impaired recently. Analyzed dividend here you can see how was the story for Teva's dividend constantly up up up and up and then stabilized recently so I thought okay so I have a dividend while I wait for the situation in pharmaceuticals to improve. Going back to Teva's guidance I saw earnings per share of around five dollars giving me a price earnings ratio of seven cash flows from operations around 6 billion free cash flows of 6 billion which was very very attractive. This is now 4 billion and then it completely destroys my initial investment thesis. The investment thesis 80 plus new product opportunities 30 billion brand value so really really positive news for Teva and they deliver they really launched lots of drugs in the last few months and year. Again going back to the recession proof investment pharmaceuticals fall much lower than normal stocks this is the comparison between the US pharmaceutical ETF and the SAP 500 in the two years around the financial crisis. As you probably know Teva lowered their guidance missed earnings impaired 6 billion of assets and the stock price went from 30 to down to 25 immediately in the first day when I see a dividend cut I sell immediately because I know dividend investors are a little bit slower to digest the news and they will keep selling for a longer period of time. So that move was correct and now the stock price is around 19 as I'm filming this. Am I going back into Teva? No because I broke one of my rules and that's don't trust intangibles as book value so practically if I move the intangibles away from Teva there is no book value. What you can see here is the impairment from $31 per share in book value now we are at 24 and free cash flow has significantly decreased in the last quarter. As you can see here Goodwill is now 40 billion on Teva's balance sheet almost 50% of assets was 45 in the previous quarter so it was 50% of assets was Goodwill and then on top of it you have another 21 billion of intangible assets. So as a value investor I should have known that intangible assets don't give a margin of safety so that was my mistake I accept the mistake I accept the loss fortunately it was my 15th investment so the loss isn't that material for the portfolio nevertheless it was a mistake and I'll be more careful in the future. All right for my second investment mistake we have to go back to 2015. As you know I don't make lots of investments so I make even less mistakes so back in 2015 I invested in Whole Foods Market. I checked Whole Foods prices sales price earnings ratio and compared everything into a plot I saw that earnings per share are growing continuing to grow but the market reacts very volatile to what's going on so you can see here a similar pattern that was there with Teva. Price earnings ratio also dropped while the number of stores increased the 365 Whole Foods shops were getting opened around the state so there was a lot of positivity I thought the Whole Foods had a good business model and will continue to grow. Of course I made the mistake to buy in at the price earnings ratio of above 25 which is again something that a value investor doesn't do. So then of course the retail conundrum in America stock price fell from 14 to 28 increased to 33 I saw there so I took so I took a loss why did I sell because I bought at the valuation that was too high and Whole Foods simply stopped growing. If we look here I bought a growth company that then became no growth company and earnings per share went from 1.48 I expected those to continue to grow at 10% a year there are now 1.22 per share. Book value was also down operating cash flows were still up so it's still a positive from a company but the company's fundamentals weren't in line with what I expected and I also found better investments in other places so both my mistakes were I had money I didn't know what to do with that money because I didn't want to be overweight two free stocks I said let's buy the fifth stock let's buy Whole Foods market it's a good investment eventually turned out a good investment if I would have kept it for two years I wouldn't have lost anything I would have made a small 10-ish percent with a dividend 10-15% profit on the investment which would be good however I sold earlier because I made a mistake in my approach to the company and I think I made my money on other stocks more than 15% nevertheless it was still a mistake I bought the company expecting growth that didn't come so I as a value investor bought a growth company and I got burnt Teva similar situation I bought the company that I thought had a margin of safety it still has it's still an interesting investment but I think I can find better investments I just have to keep myself to investing maximum in two free stocks per year and waiting that they evolve so really investing the best stocks I do a lot of research so I should follow my research and my criteria thank you for watching share your comments share your ideas share your failures and looking forward to your comments and I'll see you in the next video