Name that company

I rake in more than $4 billion per year as the world’s largest athletic footwear and apparel retailer, with more than 5,900 stores around the globe. I think I’ve “turned the sport of sneaker shopping into a theatrical and entertainment experience.” My brand names include Champs Sports, direct marketer Eastbay and San Francisco Music Box gift stores. Online I offer 10,000 footwear and apparel products and 150 brands. I serve ladies and kids, too, and have the ultimate ticker symbol. I used to be Venator Group, and before that, Woolworth. Who am I? (Answer: Foot Locker)

Know the answer? Send it to us with Foolish Trivia on the top and you’ll be entered into a drawing for a nifty prize! The address is Motley Fool, Box 19529, Alexandria, Va. 22320-0529. Send questions for Ask the Fool, Dumbest (or Smartest) Investments (up to 100 words), and your Trivia entries to Fool@fool.com.

Empty seats

President Bush has yet to put in place a commissioner to head the Food and Drug Administration. The biotech and pharmaceutical industries have been pleading for a new commissioner, blaming the lack of one for the FDA’s now frequent response to new drug applications: asking for more information, which usually requires at least 12 months of additional work.

Thoroughness is good, but without a commissioner to grant the final word, the FDA finds it easy to defer decisions. The FDA’s slowdown is dragging down drug stocks, as is Capitol Hill’s ambition to lower drug prices and its favorable legislation toward generic drugs.

Meanwhile, due mostly to a political stalemate, two of the five seats on the Securities and Exchange Commission are still empty, and two other seats are only temporarily filled. A lack of leadership at the SEC is not what investors need right now. The president and the Senate need to work together in nominating and confirming people to fill all these seats. Until they’re filled, the SEC is seriously hampered. (SEC Chairman Harvey Pitt, due to ties to the accounting industry, has had to recuse himself from more than 25 cases.)

On the bright side, recent moves to reform Wall Street should eventually lead to an improved, more trustworthy market, as happened in the years after 1929. It’ll take a long time to get there, though, especially with leadership roles left unfilled.

Emerging or retreating?

In 1998, I bought into a brand-new “emerging markets income” fund. I hadn’t researched enough to realize that the word “income” was misleading and the fund was very speculative. My money was disappearing rapidly. The second dumbest thing I did was listen to my financial adviser (who didn’t discourage me from buying in), who said, “Just wait.” After several months, I sold anyway, losing 30 percent. The fund kept sliding. Kate, via e-mail

The Fool Responds: Ouch. There are many mistakes people can make when investing in mutual funds. It’s important to understand terms. An “income” fund should aim to generate cash for investors, through dividends and/or bond interest.

Emerging markets funds, meanwhile, will mainly invest in companies based in developing countries which aren’t typically where you’ll find established, stable firms that pay dividends.

It’s also smart to choose funds with strong histories and managers with good track records. If this seems too hard, consider just sticking with a broad-market index fund. Learn more at www.fool.com/school/mutualfunds/mutualfunds.htm.

Cutting your losses

What can be done with shares of stock that lose most of their value? D.H., Princeton, N.J.

If you still believe strongly in the company’s prospects, consider hanging on. But assuming you no longer want to own the stock, you can sell your shares and generate a capital loss. This loss can reduce your taxable income by up to $3,000 per year, with any excess carried over to the following year(s). In addition, if you have some stocks you’re thinking of selling for a gain, you can use your capital losses to offset your gains.

When the stock market has a really down day, why are the people who ring the closing bell smiling and clapping? W.G., via e-mail

The people are smiling because it’s a special thrill for them, not because they enjoy a drop in the stock market. According to The New York Stock Exchange, the honor of ringing the opening bell and the closing bell is a privilege usually reserved for member firms or listed companies that are celebrating an event.

Terminology 101

See how many of these common investing terms you know.

Buy-and-hold: A strategy that involves buying shares of companies with the intention of keeping those holdings for a long time, preferably decades, and participating in the long-term success of the business underlying the stock.

Closed-end fund: A mutual fund with a fixed number of shares that’s typically listed on a major stock exchange. Because the number of shares is limited, the fund company can’t just create new shares when you want to buy in. You have to buy shares on the open market as you would shares of stock. Most mutual funds are open-ended, with a fluctuating number of shares that are bought and sold through their fund companies.

Dollar-cost averaging: Regularly plunking equal amounts of money into an investment, such as via a 401(k) plan or disciplined investing. The idea is that via regular, periodic investments, you’ll buy more shares when a stock price is low and fewer shares when a stock price is high.

Fair value: The theoretical price at which a company is valued “correctly.” Analysts often disagree about what this number is for any given company. A company’s stock may be trading above or below its fair, or intrinsic, value.

Index: A selection of securities whose collective performance is used to measure the stock market. Some indexes reflect a specific sector, industry or region. Examples include the Dow Jones industrial average (“the Dow”), the S&P 500 and the Wilshire 5000.

Index fund: A mutual fund that seeks to duplicate the performance of a particular market index by holding the same securities that the index has, in the same proportion. Index funds typically charge very low fees and are a great way to have your money grow at the rate of the overall market.

Market timing: An investment strategy based on predicting market trends something many intelligent, experienced investors will tell you cannot be consistently done. The goal is to outguess the other participants in the market, jumping out before downturns and back in before upturns.

Learn more at www.investorwords.com.