I do not recommend beginners to buy penny stocks and micro-cap stocks unless you have connections (or full understanding) to these companies.Today, many big companies were used to be penny stocks (especially those less than $1) and they moved up to micro caps and even to large caps. Penny stocks are the most profitable but also the riskiest while micro caps are less profitable but also less risky.They are not followed by institutional investors (fund managers, pension managers, insurance companies...). The small retail investors have a good chance to pick up gems. However, penny stocks are riskier due to a lot of frauds, low volume and huge spread.They are different from the popular IPOs of companies such as Facebook which are not available to retail investors before their IPOs. However, there are more companies that fit into our most profitable category than the handful of big IPOs we have every year.I further classify this category into:1.Penny stocks. They are stocks with prices less than $5 (with many exceptions) and are not listed in the three major stock exchanges for my own definition. They have fewer requirements from these minor or local exchanges (usually only financial statements). This book usually ignores stocks less than $1 as they are far too risky. Only buy them if you fully understand the companies.The majority of them described in this book are traded in OTCBB (OTC bulletin board) and OTCQX (OTC Markets Group. In addition, many others are listed in local exchanges (in both the US and foreign countries). Some penny stocks are also named as pink sheets (with symbol names ending with '.PK'). They are riskier as the filing requirements are almost none. The inter-listed pink sheets in their own countries such as Canada and Japan could be high quality and some provide the same information as our large caps in their own country. 2.Micro caps.Stocks with prices ranging from $1 to $20, a market cap between 50 and 300 million and the majority are listed in the three major exchanges. This is my definition and it may vary with others.Some stocks are in the gray area. I bought ALU at $1 and it had a market cap of 1 B then. I still consider it a micro-cap stock for my purpose as a turnaround candidate. First, practice market timing. When the market is plunging, do not buy any stock as most stocks fall. In the early recovery (a phase defined by me in the market cycle), most stocks rise especially the beaten, valued stocks and the candidates to be acquired by larger companies. The strategy "Buy and Hold" is dead since 2000. Check out the Power of Market Timing in this book.There are thousands of stocks (about 30,000 if including smaller and foreign exchanges). How can you find the winners? Use one of the simple screens that are available to you free from many web sites (such as the one from your broker) to find a handful of stocks. The filter criteria could be "P/E 0", "Sales Growth by 20%" or a combination. We include 'market cap > 50 and