When I tell people that buy penny stock and see your investment appreciate in the short term. They take it literally and start purchasing penny stocks and then after waiting for a period of 3 months or thereabouts, wanting to sell them off for a profit. But to their dismay, their portfolio may not necessarily go up or go in the positive. This is because, in any equity investment, there is a gain and so is there a loss. Don’t you know the law of motion that whatever goes up has to come down one day? Penny stocks follow the same principle. But it is only about picking about the time within which this will happen. To be more explicit, I would like to say that if you are looking at a quick overnite hit, then you are at the wrong door and I would not advise you to trade or put your money in penny stocks if you have a time horizon of less than six months. You have to understand that nothing happens overnight and that business decisions take time to reflect in the market positions of companies. So the best method of picking the best penny stocks would be to analyze the fundamentals of the company that you are putting your money into. Consider Microsoft, do you know that it had also begun as a penny stock. However, today it is being counted among one of the best bluechips to put your money into. However, this did not happen overnight and it took years for Microsoft to attain this distinction. Similar is the case of Xerox, the copier company. It takes anywhere from six weeks to eighteen months or at times even longer. There are many websites that offer newsletters of information regarding picking the best penny stocks, but not many stress on the fact that the best stock belongs to the company that has the best business model, which will survive even in times of recession. Also there is a general perception that the websites that recommend buying penny stock get fees from the companies whose stocks they put a buy option on. But it is not that way. The best portfolio is one which is not skewed towards one sector or one industry and has best penny stocks belonging to various sectors, so that if one sector is performing badly then other successful sectors can nullify their effect and the net effect is positive on your portfolio. You may well ask how to evaluate the best penny stocks and then invest in them. But you should understand that there is no one ironclad rule embossed into concrete that this is the way to pick the best penny stocks. Sometimes a company may be selected based on its fundamentals like earnings and revenues, whereas at other times the product manufactured by the company may improve the market standing of the company.