Punxsutawney Phil, you sneaky devil.

In Harold Ramis' Groundhog Day, Bill Murray plays a cynical, self-absorbed weatherman who is forced to relive February 2 over and over again until he finally gets it right.

If you're like me -- and my condolences if you are -- Wall Street is as good a setting as rural Pennsylvania to showcase the vicious cycle of repeating mistakes. In a valiant attempt to make sure that I wake up tomorrow and it's actually Tuesday, let me go over a few investing lessons that we often fail to recognize when it comes to the stock market.

1. Fundamentals, like valuations, change
Just because a stock falls, it doesn't make it cheaper. A rising stock isn't necessarily more expensive.

Fundamentals change. Yes, Bank of America (NYSE:BAC) is trading 85% off of last year's high, but what has happened between then and now?

  • Bailout money has been grabbed.
  • Assets have been written down.
  • The dividend has been all but wiped out.
  • Earnings and projected profitability have taken a dive.

Let's go over that last point. Over the past three months, analysts have gone from expecting Bank of America to earn $2.57 a share in 2009 to just $0.77 a share. How can any reasonable investor not expect a stock to take a dramatic hit if the fundamentals crumble? It's not the same company.

2. Follow the earnings
You can skirt train wrecks by staying away from crumbling companies. You may as well also hop aboard the train when momentum is building on the bottom line.

Let's take a look at a few companies where analysts are actually raising their targets for 2009:

2009 EPS Estimates

Today

90 Days Ago

GeoEye (NASDAQ:GEOY)

$1.02

$0.63

Neftlix (NASDAQ:NFLX)

$1.84

$1.72

Shanda Interactive (NASDAQ:SNDA)

$2.86

$2.69

Source: Yahoo! Finance.

Everyone will tell you that the last three months have been brutal for the economy. They're right. However, clearly Wall Street's finest see that the profit potential for GeoEye's global imagery, Netflix's DVD rentals, and Shanda's multiplayer online games in China is improving.

This is a trend that becomes even more important to notice when the market is smacking down all stocks. It's the salmons moving upstream in a cascading current that are worth noticing, regardless of the hungry bears.

3. Only sustainable dividends are worth heeding
Bank of America isn't the only company to have slashed its dividend to a token $0.01-a-share quarterly payout. Citigroup (NYSE:C) is also throwing copper at its shareowners, while cruise operator Royal Caribbean (NYSE:RCL) eliminated its distributions entirely two months ago.

If you find a yield that looks too good to be true, it probably is. Just ask these two important questions in assessing a company's ability to deliver its stated payouts:

  • Does the company earn enough to cover its rate?
  • Is the balance sheet loaded with debt?

The last point isn't necessarily a red flag. Leveraged companies can often keep the quarterly dividend checks coming. The problem in this environment is the tight credit markets. If companies have chunky debt repayments to cover in the near future, they should rightfully be watchful of their disbursements to shareholders.

4. Know your risks
Presumably "cheap" entry points can be deceptive. The difference between any buy price and a company going under is always a loss of 100%.

This doesn't mean that investors should never take chances. They do just that on every transaction, actually. However, when they warm up to a stock like Sirius XM Radio (NASDAQ:SIRI) -- and it's awfully tempting when the actively traded satellite radio operator is trading for pocket change -- they need to accept the risks. The closer a stock is to zero when the starter gun goes off, the more likely Mr. Market thinks the stock is going to be a total loss.

I haven't thrown in the flag on Sirius. If CEO Mel Karmazin can weave through tricky debt repayment cycles this year without having to file for bankruptcy, it'll be hard not to like the company if it makes it out of 2009 alive. Just know the risks, because in today's market, the mines are everywhere.

See you next year, Phil.

Other headlines to help you beat eternal recurrence:

Bank of America is a former Motley Fool Income Investor recommendation. Shanda Interactive Entertainment and GeoEye are Motley Fool Rule Breakers picks. Netflix is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has a phobia of being forced to watch Groundhog Day over and over. He can handle it once, and maybe twice. He does own shares in Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.