Just for fun, let’s say you have $10,000 and you want to buy the best stock you can. You have hundreds to choose from, but you need to find especially good ones considering you only have $10,000. You’re looking for good companies that are on sale (are undervalued). You’re going to buy your stock then sit on it like a hen and wait for those eggs to hatch into profitable little stocklings.

If you’re the impatient type layered thickly with a gambling need, you might try to beat the market by day trading. If this makes your heart sing, do it by all means, but only with money you can afford to lose. I’m not sure of the odds, but I think playing just red or black on a Vegas roulette table might give you better odds.

If you are the buy and hold type, here’s some ideas to help you choose your portfolio of stocks:

Copy somebody else who has been successful.

This is the easiest and least painful way to pick your stocks. You can get information on Warren Buffet’s Berkshire Hathaway or the top stock investments of the Vanguard Total Stock Market Fund, etc. etc.

Check on a stock’s rating

MSN Money has a slick stock rating system, which you can use free. Basically, they use a system of 1 to 10 with one being the lowest rating and 10 the highest. Their system includes return and risk factors in their mathematical model. When I ticked on their number 10, I got a list of stock picks and their prices. To be honest, there were stocks listed that I wouldn’t touch and some that looked pretty good, but I wouldn’t drop my money into any company without a more thorough analysis. The simplest way to do this if you’re math challenged, lazy, or short on time is to look up the specific company that interests you and see what other analysts have to say about it. (MSN money is not the only stock rating site out there. You can do a little Googling and discover others in that vast sea of investment sites out there.)

Dig deeper for more information.

Once you have selected a few prospective companies, check out the background of their chief executive officers (CEOs) and chief financial officers (CFOs). Let’s say it’s 2010 and President Bush is the CEO of ABC Corporation that you have selected as one of your possibilities. You might think that possibly, he has some political clout to help the company succeed, but when you dig into his past, you note that the other companies associated with him failed. You would then have to weigh whether his political inroads would be sufficient to offset his past failures.

The CEOs of most companies exchanged in the market will have bios that you can access on the Internet. Do it. One of the reasons good CEOs make a lot of money is because they are in demand. Think of it like a pro ball team and you’ll understand exactly what I’m talking about.

Do your own ratings.

If you have copious amounts of time and want to learn the financial math formulas used in various rating system, have at it with my blessings. I admire people like you and enjoy capitalizing on your hard-earned work. If you choose to go this route, you’re going to need to know how much money a company earns, how much is held by stockholders, how much the company owes, how much its assets are worth. You’re going to want to place this information in ratio format and then rank the numbers you get. Once that’s done, you’ll need to evaluate the future of the company by looking at its products, competition, and marketing strategy. Then, don’t forget to look closely at the CEO and CFO. You will also be interested in your stock pick’s growth since its inception and on and on and on. If you’re really into the whole analysis thing, you’ll be in heaven. Once you’re all through with that company, you move on to the next, then the next, then the next. Like I said, make sure you have a lot of time.

The Money Chimp gives you a simplified version of these calculations or you can go back to college and get the full truly complex version.) For more detailed information check out the Financial Derivitives website Good luck.

Look for the undervalued stock. Once you have decided on which stock(s) you like, buy those that are undervalued or wait for the market to dip, and it always does, then buy them. Remember your goal is to buy low and sell high not the other way around. Type “best undervalued stock” into Google and you’ll get lots of hits. Just be sure the stock passes the rating test of your choice and is actually a hidden gem and not a fading star.