Failing Quickly and Smartly Makes A Successful Investor

All retail investors have made bad calls and mistakes. I would even go so far to say that all investing experts and professionals have made bad calls from time to time. Learning from these mistakes and discovering how to invest better is how retail investors can grow and earn money.  

One mistake I have personally made is investing in Neovasc Inc. (NVCN), a specialty medical device company that develops, manufactures, and markets medical devices. In 2016 Neovasc was a promising company that had intellectual property that could make it a leader in the treatment of mitral valve disease which is a multibillion-dollar business. If they could bring their product to market the stock would shoot up and lead to massive stock price gains. Unfortunately, the medical device industry is ruthless and NVCN lost a major legal case resulting in hefty fines and forced profit sharing. The result, the stock lost 90% of its share price in two months. This led to my largest loss ever. While it was costly, the lessons this loss taught me were worth it. 

The first lesson is taking risks and making a bet on a company’s chances of succussing are sometimes worth it and if the risk is high, never place a substantial part of your portfolio into these stocks. This will reduce your downsides and ensure you have the capital to live another day. Another lesson is that when news is released that is bad enough to take down the company you invested in, make sure to cut your losses early rather than doubling down. Finally, this mistake taught me to focus on companies with profits as they can better weather negative news and will not need to dilute the stock price and split their stock. 

Be Smart, Be Safe, and Trade!