Gambling on these stocks is OK, i guess, but there's often a really good reason why they're so low.
It seems like a good idea to decide ahead of time what fractioon of your investment money will be in speculative activity, and the rest in other, diversified investments.
I really would not have a lot of money open in a short position on a low-priced stock. Isn''t the profit potential limited by its being so close to the bottom?
Then on the off chance that the stock makes a big move upward, you're wide open, though I suppose you can use a limit order to keep it from getting too bad.
It will be interesting to see what happens to HealthSouth. I expect them to try to spin off some of their profitable operationns. On the other hand, there is the SEC, HHS, FBI, and shareholder suits to be concerned about, and it's not clear to me if all that gets in the way of such a move.
My ex bought the stock of some company that had hit the tubes, thinking that with some help it might become profitable and take off.
However, while they did find a new investor to put a pile of money into the company, in the process a new class of stock was issued (or was it bonds convertible into a new class of stock?)
Anyway, the new stock essentially had rights that wiped out any hope of the existing stockholders ever seeing any rise in their stock. So her investment was worth zip.
She also was on top of the bubble and complained to me once, "I lost $10,000 last week." My friends lost 60 or 70% of their 401(k).
They are being very cautious now, maybe too much so.