Six months ago, I wrote about a way of screening closed-end funds (CEFs), and my testing of the system at marketocracy.com.

That article, A System for Trading Closed-End Funds, rates CEFs by dividing the discount by the expense ratio. So, higher is better (high discount divided low fees). The system also requires insider buying, to get a qualitative valuation of the fund. The test-fund continues to outperform the S&P 500, beating the index by 4% in the last 6 months.

How do you know if a cheap stock is a good value, or cheap because it is bad? If you understand the business very well, you can do your own research. A lazier and more common method is to check the opinions of people who should know, such as analysts and insiders.

Closed-end funds (CEFs) often trade at a discount, providing a quick way to find seemingly cheap stocks. They usually aren't followed by analysts, however. They also charge fees, which can undermine their cheapness.