Penny Stocks

I have been asked about investing in penny stocks quite a few times. Keep in mind this is my opinion based on personal experience and I do not have any quantitative figures to support my argument, honestly I would like to hear from those with a different take on the issue. My posts are not meant to confirm my beliefs or ideas, but to find falsification in my theories or hypothesis. I do not look for penny stocks to purchase but if I see an opportunity (real or perceived) I would be willing. Usually when a stock trades under $1 it deserves to be there. When the stock trades below a penny, I am less likely to make a purchase. There are many exceptions of stocks going from under $1 to $4 (Citi) but many penny stocks do not have the analyst coverage of Citi or the daily volume of Citigroup. I would rather short a falling penny stock if I see weakness in cash flow and more debt than cash. Right now, I do not use debt to assets because in a deflationary environment fixed assets might not sell for book value and inventory may be sold at a steep discount. I know it is easy to own 100k shares of ABC because it trades at 5 cents compared to 10 shares of XYZ because it trades at $500. But again my experience has shown me greater profit from XYZ, when in a bull market or fundamental events are occurring. Happy hunting, I do not know which way we are headed but the best advice I can give is to stay flexible.