If you spent your day on Fool.com, you likely suspect that being Foolish is 20% investing and 80% hanging out at the mall. Don't get smart; it's more like 50/50. Anyway, sometimes you've just got to go where the stories are. And today, the story was retail.

Our own Bill Mann isn't impressed, but the news was generally good, especially from the specialty retailers. Teen fashion and jewelry stood out in particular, stoking shopkeeps' (not to mention investors') hopes for a joyous holiday season. Maybe, but today's up-and-down market illustrates why, when it comes to investing, patience and moderation beat fashion every time.

In today's Motley Fool Take:

Yahoo, Yahoo!

Over the past year, investors have bid up Yahoo!(Nasdaq: YHOO) shares more than 300% in anticipation of a long-awaited pickup in online advertising. Yesterday, they got it.

For the third quarter, Yahoo! reported a year-over-year net-revenue increase of 43% to $356.8 million. Net income jumped 124% to $65 million, or $0.10 per share, beating the analyst estimate of $0.09 per share. Meanwhile, free cash flow improved a healthy 64% to $97.1 million.

In the big news, Yahoo!'s marketing services bounced 48% to $245 million, driven by growth in its sponsored search service. Included in that figure is a 20% increase in branded advertising sales. Yahoo! is the first Internet company to report earnings this season, so this bodes well for others who would benefit from such an upturn, including AOL Time Warner(NYSE: AOL).

It's also a sign of a recovery.

In recent years, as Yahoo!'s business suffered from the downturn in online advertising spending, the company has sought to diversify its revenue sources while monetizing its brand. Thus, fees revenue -- including SBC Yahoo! DSL, Yahoo! Personals, and other premium services -- jumped 38% to $79.4 million. Listings revenues also increased 26% to $32.4 million.

Looking ahead, Yahoo! expects fourth-quarter revenue between $462 and $502 million, reflecting the acquisition of Overture which closed Tuesday. The company said that Overture was in talks with Microsoft's(Nasdaq: MSFT) MSN to "expand a relationship into the future." MSN, which accounts for one-third of Overture's revenue, droppedLookSmart(Nasdaq: LOOK) earlier this week, cutting LookSmart's share price in half.

Yahoo! continues to benefit from the revenue diversification of its business, but there's nothing like a good ol' recovery in online advertising to jump start earnings.

Shameless Plug: Motley Fool Stock Advisor

For investors fortunate enough to own it, Marvel(NYSE: MVL) was one of today's superheroes. Back when David Gardner first recommended the stock to Motley Fool Stock Advisor subscribers in the mid-single digits, we called it affectionately "tiny Marvel." Now that David's investment is nearly five times its original size, we just call it "Sir." There's more where that came from, so give it a try risk-free.

Holidays' Hottest Toys

Everything old is new again. While we hear that phrase at times when fashion seems to merely be recycling itself, it can also be applied to toys. Toy Wishes magazine's annual list of the toys it predicts will be the hottest for the upcoming holiday season was just released, and it reveals several old favorites. Typically, the magazine names 12 toys to its coveted "Hot Dozen" list, but this year, it was unable to pare it below 13.

For the largest toy makers, Hasbro(NYSE: HAS) and Mattel(NYSE: MAT), each hoping for a blockbuster holiday season, inclusion on the list brings a sigh of relief and expectations for strong sellers. Several products from both companies got the magazine's stamp of approval. Now, hopefully, kids will agree, leaving their parents to frantically hunt down what should turn out to be some very-hard-to-find toys.

For Hasbro, which was David Gardner's May 2003 pick for Motley Fool Stock Advisor, the throwback My Little Pony franchise has been a winner, and should continue to be so. My Little Pony Celebration Castle made the hot-toy list. Delving into 1980s toy fun again, Hasbro's BTR Transformers also should be a hot item. Hasbro's newfangled Beyblade remote control top with launcher looks futuristic alongside the other Reagan-era offerings.

Mattel is banking on Barbie, again. The curvaceous doll to have this time around will be another Swan Lake Barbie, all prettied up as Odette in the famous ballet.

And then there's Elmo. Last year, Mattel graced us with Chicken Dance Elmo. This year, he's doing the Hokey Pokey. I'm still waiting for Computer Tech Elmo, or Sweep the Floors Elmo. You know, let the little red furry guy do something useful.

Mattel's Powertouch Learning System, an interactive computer that helps children learn to read, also made the list. The similar LeapPad Plus Writing Learning System by LeapFrog(NYSE: LF) did, too. (They're so similar, in fact, that LeapFrog is suing Mattel over patent infringement. How's that for holiday cheer?)

Other must-have items are Barbie Cook With Me kitchen, Care Bears Bedtime Lullaby Bear (another 1980s revival), Bratz Formal Funk Runway Disco, McDonald's McFlurry Maker, Neopets, and the Leapster educational game system.

Parents, take note. Save yourself some headaches several months from now when your local Wal-Mart(NYSE: WMT), Target(NYSE: TGT), or Toys "R" Us(NYSE: TOY) can't keep an Elmo or BTR Transformer in stock.

Quote of Note

"Obstacles are those frightful things you see when you take your eyes off your goal." -- Henry Ford

Gap's Improving "Flow"

Shares of apparel retailer Gap(NYSE: GPS) were up this morning in heavy trading following the release of strong September sales. Double-digit same-store sales gains in all three key divisions offer further indication that the would-be fashion dictator is serious about getting back on track from a fashion and marketing perspective.

LouAnn Lofton gave the company a high five for its second-quarter performance in August. This has proven important in a slow economy -- particularly for mass-market retailers like Gap, as customers have focused on staple items, hurting companies that over-marketed fashion items. (This clearly impacted Gap Kids competitor The Children's Place(Nasdaq: PLCE), another company we examined today.)

When considering Gap, however, it pays to revisit the arguments cited when our Rule Maker Portfolio made the painful decision to sell the stock. Particularly convincing was a deteriorating Flow Ratio, which reflects how well a company manages its working capital.

Ideally, the Flow Ratio comes in below 1.0, meaning the company is delaying more of its own payments than it carries in inventory and unpaid bills. (More on the "Flowie" and how it's calculated is available in our archive.) When the Rule Maker sold, Gap had consistently come in above the cutoff of 1.25 for several quarters running.

Things have looked much better over the last six quarters, according to data from Multex Investor and Gap's SEC filings. The Flow Ratio has come in at 1.27 or better in all six, generally coming in near -- and in one case, even below -- the "magic" 1.0.

That's another good sign from this company on the mend -- and another reason investors should look forward to the company's third-quarter earnings.

Discussion Board of the Day: Quitting Smoking

According to a survey published today by the Centers for Disease Control and Prevention, the percentage of American adults who regularly smoke cigarettes fell slightly in 2001. Unfortunately, the same study suggests that the nation will not meet its smoker-reduction goals set for 2010. What to do? Discuss this and more at our Quitting Smoking discussion board. Only on Fool.com.

More Fool News

For all today's stories, see Today's Headlines.

And Finally...

The Motley Fool is currently seeking full-time and/or freelance writers to contribute to our online news and commentary. Do you read columns like Jeff Fischer's 10 Heavily Shorted Stocks or Robert Brokamp's Three Roadblocks to Retirement and think to yourself, "Hey, I could do that"? Now's your chance. Want to be part of the Fool team? Find out what we're looking for under Editorial at jobs.fool.com.

Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim