Penny Stocks - Good Investment or Bad Investment

I always hear the question, " The stock is down, is it still a good investment?"

Investors need to keep the game in perspective and this has been always a good way of quantifying risk. Imagine someone gives you a tip to bet a horse. He tells you that he knows the jockey and the trainer very well and that the horse is running very well. The horse also ran one of it's best races two weeks ago and placed 3rd at a well known track. You look at the odds on the horse and it's 35-1.

Allow to me put it in another perspective. What are your odds at winning at roulette if you play one number?

I always say that no matter what due diligence you have done and no matter what you think you know, you're odds are about 35-1. You can possibly trade successfully but if you invest in penny stocks, play with the 35-1 money. I hope you wouldn't mortgage the house to bet a horse. The same perspective should apply when investing in penny stocks.