How I Bounced Back After a Poor Investment Choice

I was over the moon when I first started investing about three years ago. I read up on investing fundamentals, signed up for a couple newsletters and put my money to work by investing in my very first stock.

Within just one week, the company's shares were suspended by the U.S. Securities and Exchange Commission (SEC). I couldn't believe it! I didn't fully understand what that even meant, or what I was supposed to do next. I decided my first step was to learn more about what was happening.

The SEC can suspend trading in a stock for up to 10 days if there's a lack of publicly available information, including financial details, or if there are questions about the accuracy of public information or possible insider trading concerns. In Canada, the Investment Industry Regulatory Organization of Canada (IIROC) monitors information disclosed by companies and can issue trading halts, which temporarily pause trading to allow time to absorb information that may cause significant price swings. IIROC also coordinates cease trade orders issued by provincial securities regulators. In the fiscal year ended March 31, 2016, IIROC's surveillance group helped coordinate 123 cease trade orders. That's far below the more than 3,500 issuers listed at the end of 2016 on the Toronto Stock Exchange and TSX Venture Exchange together.

My first investment left me around $500 in the hole, and I could have easily thrown in the towel on investing altogether. Instead of giving up, I decided to learn from my experience. Here are some of the principles that have helped guide my more recent successes:

1. Research matters

Researching a little at a time is tremendously helpful—you can't learn everything you need in one fell swoop. However, that research has to be accurate and thorough. With my first investment, I got caught up in big claims of "rapid growth" and "buy before it's too late!" that I had read on various blogs. On top of that, I was investing in a field I didn't know much about. I did read a bit more on the company's own website, and thought that was good enough. Had I taken the time to read pieces from analysts and other third parties, I might have made a different decision. It reinforced the importance of looking to multiple sources for the full picture.

2. Consider diversifying

I put all my investing money into one stock, and lost. Balance can be important, so dividing money between multiple investments has been a better choice for me. Now when some parts of my portfolio are underperforming I have some peace of mind knowing my other investments can help make up for it.

3. Staying in touch

Because this was my first investment, I eagerly checked it several times a day. The upside of that was that I knew almost immediately when the stock was suspended and when the suspension would end, so I could decide what to do. While you don't need to click the refresh button on your browser constantly, staying on top of your investments is important. I continue to check my portfolio about once a day. That's more than some might recommend, but it works for me. It helps me notice trends in the market and keeps me focused on my long-term goals.

While it was a tough first investment lesson, I'm glad I persisted. I'm sure there will be many more lessons to come, but I know that hard-won knowledge can only help as I navigate the investing years that lie ahead.