Mistake #3: Ignoring Quarterly Reports

While toying around with short-term investments in the stock market, on two occasions I failed to take notice of when a company's quarterly report comes out. Quarterly reports can be a major factor in the stock's price. If investors don't like what they see (lower than expected earnings, for example), they will sell their shares, driving the price down.

This happened to me while investing in Rogers Communications Inc. Their past quarter wasn't so good because of all the other smaller, low-cost wireless providers just getting started with their ad campaigns. Rogers lost some market share to companies like Mobilicity and Wind Mobile, despite Rogers launching their own Chatr brand. Rogers' loss in market share may only be temporary, or it could be lasting. However, at this point in time, a significant number of shareholders of RCI.B decided that it was time to sell. The stock went down nearly 8% the day the quarterly report was released, and continued to fall over the next few days. Since I was only a short-term investor, I decided to sell my shares, as all my gains from the past month or two were now back down to zero.

Ignoring the quarterly report actually happened to me a second time. I was trying a short-term investment in IAMGold Corp. based on some basic technical analysis. The stock reached a high point, and I decided to sell my shares. The next day, the quarterly report came out saying that earnings were less than expected this quarter. The stock's volume spiked as everyone sold off, making the price drop over 4% in one day. Had I waited just a day longer, I would have suffered that same loss.

My lesson learned from these experiences is to pay attention to the fundamentals of a company you are invested in, whether it's for the short term or the long term.

Update: A good tool to stay on top of important dates with regard to your investments is Google Finance portfolios. If you add all your stocks to a portfolio, its summary page has an "Upcoming Events" section that lets you know when earnings reports, quarterly reports, etc. are due to be released.

Mistake #2: Investing While Unemployed

During the summer, I was able to save some money from working at a full-time co-op job for school. When the fall came and it was time to go back to school and pay tuition, I was hoping that my student loan would be able to cover me for the term, until I went back to a full-time co-op position. I decided not to take a part-time job, and try to focus on school work instead.

My mistake was that I've had to dip into my stock account savings to survive until I am employed again. What's worse is that I made a few too many trades during the months being unemployed, because I was trying to re-allocate my assets in a more short-term way. On top of that, I've had to sell some stocks before they've had the time to appreciate in value a little. I think I've managed to stay around the break-even point, but I don't think I'll be investing again until at least next summer, when I'm caught up on bills, saved some tuition money, etc. and have some extra money that I can put away in my stock account again.

Mistake #1: Didn't Do Proper Research

I have done enough trading in the stock market to do justice to a post about my first mistake in investing. The lesson learned is: "Always give a stock due diligence in research before buying."

My first ever stock purchase was of Rogers Communications Inc. My reasoning was the following: Rogers is always first out with the hottest new cell phones (iPhone, etc.), they treat their customers well, and give them free stuff every so often, their customer support isn't out-sourced (at least at the time it wasn't), they have the best network coverage in Canada, and the wireless industry in general is booming. Higher demands on wireless data transfer is necessitating further development of the wireless infrastructure. This might make sense from a general perspective, but I didn't do any fundamental analysis, technical analysis, or even cursory analysis of the stock.

I just so happened to buy the stock at a good time, and the price went up about 12% over a few months. Then in October, their Q3 financial report came out, people didn't like what they saw, sold their shares and Rogers Comm. Inc. went down about 11% in three days. I decided to sell because I was back down to almost $0 gain, and needed the money anyway.

A second example of my mistake was investing in Alamos Gold Inc. I had noticed that over the years and months before now, Alamos had gone up, up, up in price. I thought, if I jumped on now, it'll just keep on going. Lesson number two: "Don't base an investment decision on past performance." Alamos went down about 10% from when I bought it, and I decided to sell before it got worse. It was a good thing I did.

I had read these two lessons before investing anything, but apparently had to learn them the hard way. At least I'm learning from my mistakes, and I did take one lesson to heart without having to learn the hard way: "If things look bad, get out before it gets worse."