A few weeks ago Money Philosophy decided to get back into the stock market game after having been out of it for a few years. He was immediately drawn to stocks like GM & C which had taken a huge hit since the stock market fell through the floor in September of 2008. These stocks looked like they were rebounding and he was thrilled about the possibility that they may eventually reach their 52 week highs.

His C and GM picks were very successful and that got him to look for other stocks similar to them. He found a couple of microcap stocks, LJPC and CTIC, that looked like they may break through with big gains. These stocks were bigger risks but they also appeared to have even greater potential for reward.

That ended up being the case as both CTIC and LJPC ended up being huge gainers.

He thought that he may actually be onto something big with the way he was choosing these stock picks so he decided to try and make a stock screener which would find more stock buys like them right before they were about to “pop” with big gains.

The reason I’m writing this blog post today is because his first stock pick with this new screener reached a high 40% above it’s open today and that certainly impressed the heck out of me. Obviously my imagination is off and running with the kind of gains I could make by following his penny stock picks.

I definitely don’t expect every stock pick he makes to have big gains. No way. And it’s key to remember that a gain isn’t “official” until the point where you actually sell the stock. Making the decision of when to sell is equally as important as deciding when to get in. The really cool thing is that he also makes a post on his blog (and on Twitter) when he sells his holdings.

He does not share the precise way he screens for these winning stocks as I guess he’s too selfish to share all of his secrets but he definitely shares more about what he’s actually doing on the market than most so called “gurus.”

He’s clear that he is definitely not giving investment advice never giving investment advice. It’s always recommended that you do your own investigating before buying stock.

While it’s tempting to sign up for The Day Trading Robot or The Forex Autopilot System, I definitely think I’ll have better results just by following what he’s doing. And of course the really cool thing is that it’s free.

One final note: It’s definitely a good idea to make “imaginary trades” before you start using real money when trying a new stock picking strategy.

No matter what your experience is, when you buy stocks the one thing you consider first is if the price will go up or down in the foreseeable future. Not stopping to take this into account, may very well cause your portfolio to spiral downward.

Aside from thinking about that first point, it is time to verify that the stock is undervalued and looking for an upswing. Should you start to think that buying undervalued stocks means learning how to buy penny stocks then you may end up losing money no matter what. In reality, knowing how to pick stocks correctly is the same as learning how to buy like a professional.

Exactly what is buying cheap stocks then? A cheap stock is just a stock that is priced below it’s real trading value. Knowing how to find and buy these cheap stocks is what makes the pros so wealthy.

What do you do to buy a stock when it is cheap? The number one thing to look for is a sector that is not performing like it should or should be doing better in a short period of time. Very that the PE multiple of your stock is favorable when compared to it’s competitors PE multiple. If the stock price looks like it will go higher and the competitor comparison is good, you will want to consider the stock for purchase because it might be undervalued. You will probably want to buy it if you think the price is below what it should be.

Does this mean you should not learn how to successfully trade mutual funds? Don’t be silly. If you refuse to learn other ways of investing then you will probably end up broke. Learning how to invest in things like mutual funds will help. Otherwise you might be sorry if you do not. Mutual funds should be a perfect way to make your investments grow over a very long time. And who wants to be one of the broke and regretful fools?

Before you buy any shares of a company the first thing to think about is whether or not the company has a strong balance sheet. Ignoring this one important piece, can result in a loss of capital.

Aside from thinking about that first point, you must make sure that the stock is valued correctly. Should you start to think that buying undervalued stocks means learning how to pick cheap penny stocks and mutual funds then you are sorely mistaken. In reality, knowing how to trade mutual funds and cheap penny stocks would be the same as buying stocks cheaply.

So what does this all mean? Buying cheap stocks means purchasing them when they are trading below face value. Being able to locate and purchase these cheap stocks is will make you as rich as the professionals.

What exactly do you look for when trying to find cheap stocks? The number one thing to look for is a sector that is not performing like it should or should be performing better. Compare the PE multiples of your stock with that of it’s competitors. If the stock price looks like it will go higher and the competitor comparison is good, you will want to consider the stock for purchase because it might be undervalued. Buying the stock should be considered if you think the price should be higher.

Can you then get away with not learning how to trade mutual funds and cheap penny stocks? Don’t be silly. Denying yourself the option of learning other ways to invest would be extremely foolish. Learning how to invest in things like mutual funds will help. Else you will end up sorry if you do not. Mutual funds could be the best way to grow your savings and retirement money consistently over several years. And who wants to be one of the broke and regretful fools?

Before you buy any shares of a company the first thing to think about is whether the underlying value is worth the price. Ignoring this one important piece, can result in a loss of capital.

Aside from thinking about that first point, make sure that the stock is priced low and ready to go higher. If you think buying undervalued stocks means learning how to pick cheap penny stocks and trade mutual funds then you have completely missed the mark. Essentially, knowing how to pick cheap penny stocks and mutual funds is akin to investing like you have done it your whole life.

What are cheap stocks then? Cheap stocks are stocks that are priced below what they are worth on the market. Learning how to buy stocks that are cheap is how the gurus make all their money on the market.

What exactly do you look for when trying to find cheap stocks? The first thing to do is identify a sector that is under performing or should be doing better in a short period of time. Then price the stock based on it’s PE multiple against it’s competitors. If you have a favorable position and the stock should be at a higher price, you probably just found an under priced stock. If you really believe the stock is under priced then you should think about buying it.

Does this mean you should not learn how to pick cheap penny stocks and trade mutual funds? Don’t be foolish. You would not ignore other ways of investing unless you wanted to lose a lot of money in the process. Don’t be a fool and learn how to invest in mutual funds as well. Else you will end up sorry if you do not. Mutual funds should be a perfect way to make your investments grow over a very long time. You would not want to be one of the destitute and regretful would you?