The perfect stock suggests that it would fit in any portfolio at any time. That perfect stock doesn't exist. Some investors want capital gains from growth only. Others want income. Still others want some of both. So can there be a perfect stock?

There is for each group of investors. For the ones looking for capital gains, the stock would have these attributes:

This past week, Warren Buffett's holding company, Berkshire Hathaway (BRK.A), gave an update on what its stock holdings look like, what stocks were added, which ones added to, and which ones it was selling. Though there aren't many major changes in the list, there are some telling points that most investors can study and learn how to invest like Mr. Buffett.

These are stocks he's added to or added in the last quarter:

• Becton Dickinson (BDX): Up 155,000 shares (total owned: 1.889 million shares).
• Fiserve Inc. (FISV): This is a new position of 4.4 million shares.
• Iron Mountain (IRM): Increased position by 206,000 shares. Has been buying this over the past several quarters with a starting position of 3.3722 million shares.

With the market showing some signs of life, it's easy to believe there's a rally about to happen. Not just a few hundred points, but a real rally that will take the Dow Jones Industrial Average above 11,000. Not gonna happen.

While earnings have been good in many sectors (stellar in tech), the overall economic picture continues to point to an even slower economy. Even the Fed heads advise to keep our expectations low. Housing prices aren't moving up, except in a few regions. Employment isn't improving. While interest rates are low, no one wants to borrow, especially if they've been laid off for six months. Companies are sitting on billions in cash, looking to spend on more tech but not people.

There aren't many places you can buy dollars at a discount. One of them is in closed end funds (CEF). There are many varieties of CEFs and many of them are selling below their net asset value (NAV). That means you can buy dollars for less than a dollar. Here's how it works.

A CEF is a mutual fund that issues a limited number of shares, takes in the money from that issuance, then invests it into specific types of investments, usually stocks or bonds that reflect the mandate of the fund. For example, there are country funds such as the Japan Fund (JEQ), the Mexico Fund (MXF) or the Korea Fund (KF). There are also CEFs that reflect certain types of stocks, such as small cap or large cap funds. There are bond funds, growth funds, value funds, etc. In short, there are CEFs for almost every type of investment in which you have an interest.

There are rumors that BP (BP) may declare bankruptcy. That way it can avoid some of the liabilities from the giant oil spill in the Gulf of Mexico. No one knows what BP will do, and it seems to be making a concerted effort to do the right thing, especially since the president of the United States has taken a personal interest. We can only hope for the best.

As investors, however, it's important to know how a bankruptcy works and how it affects stockholders of a company that goes through it. In a nutshell, you get screwed. Here's how.

The first thing to understand is that a company is a legal entity unto itself. While there is management to run it, the company, in the eyes of the law, is almost like a person, responsible for its actions. So think of it as a breathing, living being.

For many investors, the answer is elusive. They sort of know what a stock is but when pressed they don't fully understand what it is they're buying when they decide to invest. Usually they respond with something like: "I'm buying a company." And that's right. But specifically, here's what they're buying.

When you purchase a stock, you buy two things: a percentage of the Book Value of a company and a percentage of earnings in the future. Let's look at Book Value.

One of the benefits of watching a market crash, then rebound quickly, is to see how well some stocks survive the initial hit and then recover. There's nothing scientific about this. Merely observation. But it can tell you what other investors think about your stocks.

For example, if the stocks you owned were down (on a percentage basis) much more than the broad market indexes (use S&P 500 for your larger cap stocks, the Russell 2000 for small caps), then investors are selling your stocks at a higher rate than they are stocks in general. In other words, they think your stocks are weaker than most others and are dumping them first and faster than the rest of the market.

Goldman Sachs (GS) made a huge mistake: it earned too much money when too many others lost large amounts. While the economic circumstances were somewhat different, this is very reminiscent of when Drexel Burnham Lambert made the error of profiting from deals no one else could have done, and then had the audacity to pay the genius behind the deals, Mike Milken, a great deal of money. Those howls of moral righteousness that brought down Drexel and Milken are echoing in the halls of Goldman Sachs.

Bank earnings are upon us. Citi (C) reported a $4.4 billion profit, the largest positive number in three years. Last week JPMorgan Chase (JPM) and Bank Of America (BAC) had great numbers to crow about as well. Part of the good news came from lower loan loss reserves as the economy begins to get some traction on the up side. But some of the positive report was a result of bond trading and/or investment banking. And that's a little troubling.

The reason for investor concern is that bond trading and investment banking are not sustainable business models. They are more like geysers: they shoot up beautifully when the timing is right -- but one never knows when that timing is, unless the geyser is Old Faithful, which none of the bond trading or investment banking deals are. Yes, they contribute hugely to the bottom line as bond traders catch a trend in interest rates and make extraordinary gains or develop new products that create new revenues. But just as quickly the bond market can turn (like the stock market), and large gains turn to losses.

We'd all like to know the secrets for buying winning stocks. Here's the first one: there is no secret. No one formula and certainly no one data point is THE answer to finding the next hot stock. That isn't how investing works. But there are certain numbers that will help increase the odds of finding a stock that may go up. Here are some that will help.

Earnings. In real estate, the three most important words are location, location, location. In successful stock investing, they are earnings, earnings, earnings. Ultimately, all investing comes down to earnings. Earnings are what investors own. They contribute to Book Value (see below). They are the reason anyone invests in a stock: to reap the future rewards of a successful company. Earnings growth is what an investor wants to see. The stronger the better. Companies increasing earnings by more than 10% each year for the last three years have been exceptional as the economy has diminished. Look for companies that can grow earnings well above average no matter what the economy does.

Many stocks have rallied significantly over the last year. In fact, if you bought almost any stock on March 9, 2009, you would have made a great deal of money. That was the low point for almost all stocks as the market gave in for its final capitulation and beat most of us over the head one last time with the heaviest frying pan it could find.

Stocks like Beazer Homes (BZH) and Ford (F) were selling for 24 cents and $1.65 last year. Other great bargains (in hindsight) were everywhere. It was as if the tree of stocks had been hit by a great gust of wind and all its fruit was lying on the ground. Everywhere you looked there were stocks selling for unbelievable prices. Of course, everywhere else you looked there was doom and gloom, ever increasing arguments that screamed "sell," not "buy." The world was definitely ending; capitalism was dead; there was no hope.

Let's see now. Consumers are more pessimistic this month than last month. The Dow Jones Industrial Average loses 100 points on the news. Unemployment is better in one month, worse in another. The DJIA goes up on the good news, down on the bad. Home Depot has a good quarter, raises its dividend, and forecasts a better year for 2010. The stock goes up 50 cents on a day when the market is down 100 points. Other stocks are light on revenues. They go down 10% or more.

The market always sends mixed messages. There has never been a time when all the news is good. That's impossible. If all the news is all good, it means the economy is really thriving. Then investors worry about things being too strong, afraid that inflation will come back, so they sell stocks. When things seem totally awful (see 2008 and 2009 as examples), some investors see nothing but upside potential (see Warren Buffett and General Electric (GE) purchases), and they buy stocks. Most of the time, however, the news is good and bad. There is never a straight upward or downward line for the DJIA or for any stock for a long period of time unless the stock goes out of business, then the line is flat.

If investing were only about numbers, then the math Ph.D.s would have all the money. But they don't. While numbers are very important and provide the majority of an investment decision, other elements come into play that are critical to any stock's success. They're hard to find sometimes but always worth the effort.

If you can discover these elements in a stock and great numbers, too, you've got all the odds for investing success in your favor.

The number one, most important piece of the investing puzzle is management. Management is everything. It's where all ideas begin and execution of them is implemented. Management can turn around a bad company and make it great. Management can take a good idea and turn it into a successful business.