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If you are reluctant to sell, you are typical of American investors, who sell their winners and keep their losers. Investors do this because the act of selling at a loss is an admission that they were wrong.

As investors, we deceive ourselves a thousand different ways, both large and small. We attribute gains to acumen when they are the product of luck, and attribute losses to ill fortune when they are often the product of stupidity or inattention. The common problem is that we fall in love with a company that is unworthy of our affection.

The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll.

Earnings have proven to be a poor tool for valuing companies, and not just because they are subjectively determined. Earnings also ignore the crucial consideration of the cost of capital.

Returns to investors reflect changes in a company's financial performance, not the level of its performance.

Going by the numbers alone can be misleading, meaningless or downright hazardous -there are banana skins galore in financial statements "tidied up" for earnings season. One-time charges, for instance, while properly used to take nonrecurring expenses that do not materially affect company value off the balance sheet, can hide unfavorable expenses, bad debt or poor investments. Easy to calculate, the venerable valuation standard P/E ratio-market value per share divided by EPS-reflects the market's collective opinion regarding the company's growth prospects. The rub, though, is that accounting-based EPS has more malleability than Play-Doh, and factors such as inflation can bend the truth of the P/E ratio. Then there is private equity's darling, EBITDA, fine for comparing profitability between companies and industries but blind to all-important operating cash flow and changes in working capital.

The first problem with labeling a particular style of investing "socially responsible" is that it suggests that other kinds of investing are not. So it's no wonder many people find the concept silly or offensive.

At some level, after all, our very economic system is socially problematic. The benefits accrue disproportionately to owners (investors, this means you), who make fortunes off the labor of rank-and-file employees. Luck plays a role, as does timing. Education, connections, and money give some people an edge, and hard work doesn't always carry the day. The key to increasing profit and wealth is improving productivity, and an owner's glee at producing the same amount with 50 workers as with 100 is not often shared by those who got canned. If you're going to invest in any free-market enterprise, you're going to have to accept that no matter how enlightened your choices, your money will be supporting wealth disparity, inequality, and other arguably unfair conditions that go hand in hand with a successful free-market economy.

Be fearful when others are greedy, and be greedy when others are fearful.