I happened to be looking at a chart of JDS Uniphase (NASDAQ:JDSU) the other day. I occasionally check in with this stock because I owned it for a short time last year. I barely got out of it alive -- well, that might be a bit melodramatic. Let's just say I lucked out and broke even.

I'm a long-term investor, and I thought JDS Uniphase might make for a great turnaround story. Unfortunately, I made a few mistakes with this buy. First, I overestimated my stomach for the volatility of a low-priced issue. Second, I realized I didn't understand the company that well. And third, I happened to believe in the recommendation of a couple of famous TV analysts who were bullish on the company and its stock at the time. I turned out to be wrong, sold, and moved on. The stock proceeded to drop from my sell point.

Look, we're emotional creatures. I'm in the same boat as everyone else: An investor sometimes perceives that a low absolute share price is a vehicle to riches. It's important to realize that stocks are sometimes priced low because the company just isn't doing the job of increasing shareholder value. In the case of JDS Uniphase, it hasn't generated any real earnings or operational cash flow in a long time. So the ups and downs of other people's expectations really took its toll on my psyche.

Understanding a company is vital to investing success. I really failed on this one. The problem with buying a company without performing the proper due diligence is that you won't know what to do when the aforementioned volatility takes hold. In the case of Marvel Entertainment (NYSE:MVL), I knew exactly what to do when it made its latest 20% drop -- I bought more. I understand what it does and why a drop in share value might represent an opportunity. With JDS Uniphase, I didn't really know what to make of the price movements. Peter Lynch had it right: Think about researching Procter & Gamble (NYSE:PG) because you buy Pringles and Gillette razor blades.

Which brings me to point three: Don't blindly accept a recommendation from an analyst. It doesn't matter who the analysts or stock gurus are. The bottom line is that you have to take the time to understand why an investment vehicle might be the right choice for your situation. Look at any recommendation as an idea first. Ideas are guilty until proven innocent, and the way you prove an idea to yourself is by performing your own due diligence. Sorry to be trite, but that's the way it is.

Remember, the idea is not to hope for a lucky break from the market -- that's too much like playing the lottery. You want to become proficient at processing information. So don't buy a stock because it's closer to a dollar than one hundred dollars, or because Jim Cramer told you to. Take the time to learn the ins and outs of the company. And if that's too much trouble -- as it was with me and JDS Uniphase, apparently -- it's probably a good move to remove that stock from your consideration.

More Takes on JDS Uniphase:

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Fool contributor Steven Mallas owns shares of Marvel Entertainment (and understands why he does). The Fool has a disclosure policy.