The worst investor in the world is the investor who's down a little, and thinks he or she can make it back by doing something dramatic. This usually involves "doubling-down," or using a lot of margin, but it usually winds up turning a small loss into a major problem. They delude themselves into thinking that a quick fix—just this one time—can correct the shortfall.

When you're down in an investment, you can't let your emotions get the best of you. The first lesson is that the stock doesn't know you own it or what price you paid. I often hear from investors who own horrible stocks but they refuse to sell because they "don’t want to book a loss." The stock isn’t aware of your entry point. If it's a good stock, then keep owning it. If it's bad, then sell. It really is that simple.

Here’s a chart of Expeditors (EXPD) going back 20 years. You can see that there's never been a time that was “too late to bu

The market closed its fifth straight boring-as-hell day. Not that I’m looking for excitement, but this is getting ridiculous. Let at these numbers: the Dow, +6.49 points, the Naz +3.74 and the S&P 500 +2.06. Of the 100 stocks in the S&P 100, 74 moved less than 1% today. This is like watching the WNBA. The VIX (^VIX) is now back below 13.

Here’s something a little bit interesting. After an accounting scandal earlier this year, American International Group (AIG) restated its profits for the last five years. It turns out that the company had overstated its profits by $3.9 billion. Hey, those pesky decimals can be kinda confusing. Millions, billions, kilometers, it’s all one big blur. Well, now the company is correcting the correction. AIG says that it understated the previous corr

William Poole, the President of the St. Louis Federal Reserve Bank, said yesterday that the Fed’s interest-rate policy ought to be "risk-averse." That may not seem like a big deal, but in the carefully-worded world of central bankers, that's considered to be going ape shit. I'm surprised Poole wasn't taken down with a Taser.

In English it means, or the market is taking it to mean, that the Fed is going to raise rates three more times. Until now, the market was expecting two more rate hikes—one on December 13, and another on January 31, which is also Greenspan’s last day. Now the market is also expecting another rate increase at the Fed’s March 28th meeting. That will bring the Fed funds rate up to 4.75%.

Here’s a graph of the futures contract for the Fed funds rate for next May. You can see the spike around the time of Katrina when the market thought the Fed might p

Yesterday, it was AIG (AIG). Now General Motors (GM) is restating earnings from 2001. When it rains, it pours:

General Motors said it would restate its financial results for 2001 by up to $400m because of accounting errors while losses for the second quarter of 2005 quadrupled after a revision of its holding in Fuji Heavy Industries.

The world largest carmaker, which is already suffering from four consecutive quarters of losses and the collapse of its main parts supplier Delphi, said in a filing with the Securities and Exchange Commission that its 2001 earnings were overstated by $300 million to $400 million, but the final amount hasn't been determined.

One of the things I like about this blog is that it let’s me think out loud. For example, there’s one stock I’ve been following that I’m truly undecided about. The company is Patterson Companies (PDCO). It’s exactly the kind of stock I like. Steady earnings growth, high returns-on-equity and consistent operating history.

The company makes supplies for the dental industry, and it’s a major supplier for the veterinary industry (don’t laugh, it’s very profitable). For several years now the company has grown its earnings by 20% a year like clockwork. To come up with an estimate for next quarter, all you had to do was add 20% to last year’s quarter, plus or minus a penny, then sit back and watch. The stock acted like a bond with a 20% coupon. Here’s the company’s earnings-per-share for the last 10 fiscal years:

1996 $0.22
1997 $0.25
1998 $0.31
1999 $0.38
2000 $0.48