I deeply regret buying this FTSE 250 share!

One thing I can confirm is that choosing your own investments is not easy, even after 35 years of practice. Sometimes, I buy stocks and they soar. Sometimes, I buy a dog and crash. Perhaps this is why many investors prefer to buy the entire market over low-cost index-tracking funds. For example, this is the story of one howler – a FTSE 250 showing me a purchase recently that blew up in my face.

We bought 17 new shares

Over the past seven months, my husband and I have bought a total of 17 new shares. This includes seven FTSE 100 stocks, three FTSE 250 stocks, and seven US stocks. We bought 10 UK shares to generate extra dividend income, while seven American shares were betting on global recovery and growth.

All but one of our new US holdings were purchased on November 3, the week before the US midterm elections. The good news is that these six stocks have made solid gains, especially the four mega-tech giants that were bought for their size and strength.

A FTSE 250 flop

Elsewhere in the new portfolio, FTSE 100 stocks have mostly shown early paper gains, with the exception of one property stock which has taken a dive. But the most disappointing thing so far is that the new FTSE 250 shares show only one advance above the buy price. Here is one FTSE 250 faller I am deeply disappointed in.

Jump Line diving

At 52 weeks high, Direct Line Insurance Group (LSE: DLG) shares hit 312.7p on February 10, 2022 – two weeks before Russia invaded Ukraine. After they plunged below £2 last summer, we snapped up some shares at the end of July at a whisker above this level.

First, the stock rose again, rising to 15% or more of its purchase price. But in a trading update released on January 11, the group announced it would cut a cash dividend to rebuild its weakened balance sheet. This grim news sent the stock plunging almost a quarter (-23.5%) on the day. Urgh.

To be honest, I was very angry with this decision, because the CEO of the insurance group had stated in November that Direct Line’s dividend was safe. Then a blast of extremely cold weather in December sent insurance claims soaring by £90m. One piece of good news is that chief executive Penny James resigned on Friday – most likely at the behest of angry shareholders (myself included).

On Friday, the FTSE 250 stock closed at 173.8p, down 43.1% for the year and 13.2% below its purchase price. Thus, what initially started as a good buy has turned into a disappointment. I guess that’s just one of the dangers of investing in shares during a period of volatility.

The latest news has reduced the company’s market value to less than £2.3bn – a far cry from the days it was a FTSE 100 company. Encouragingly, the stock has rebounded 7.3% from its 2023 low of 161.95p on 11 January. In summary, even if the dividend is gone, the CEO’s departure gives hope for change. So I’m going to stick with this FTSE 250 dividend-free stock, even though I’ve lost so far!