A lot of what you said is true.
It is a form of gambling and it is addicting. First you start off with a few thousand in your account, then another 1k, and another 1k. Before you know you have so many different securities that it is hard to keep track off. There are a lot of pump and dump games going on. It is true that there are bottom fishers. Most of already have apple in our S&P 500 or Wilshare 5000 index funds. Here are some of my rules of penny stock investing:
1. Never invest in a penny stock without earnings.
2.Don’t invest during a bearish down trend unless near the bottom.
3. Don’t invest more than $100 if the prices is less than .001
4. Don’t invest more than $1000 if the prices is lies than .01
5. Only invest if there are earning reports.
6. Only invest if there is a potential for earnings and revenue upgrades and possible upgrades to nasdaq stock exchange.
7. Always check the charts for historical patterns
8. If the stock is diluted or is about to be diluted wait until dilution is over before investing. Reverse stock splits are not bad if the stock is upgraded and the price is higher.
9.Set price targets for profit taking to at least get back initial capital investment.
10. Every year between sept to dec penny stocks decline. Look for candidates that can triple the money and put no more than 300 each in 10 positions. Try to pick shares where the price is no more than .004. Invest the money and unload when it reaches a penny or triples.
11. Realize it is easier to buy a penny stock than sell it. Only sell into rallies where you price point is meet.
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