McMohan - 12:19 pm on Oct 25, 2012 (gmt 0)
I believe Google can certainly downgrade your rankings (whether that constitutes a penalty or not is a different discussion) based on sites that link to you
I guess we both are implying the same conclusion. If some links Google thinks aren't in good taste, then it might effectively 'nofollow' them. If those links were holding up your site, then ranks naturally fall. Some may call it penalty, which I disagree with and merely call it discounting the links.
Penguin doesn't devalue links...it punishes them.
Google already devalues bad links...so why would
penguin be different?
How could you be sure? Majority of the sites (not counting the collateral damage) that were affected by Penguin were being propped up by type of links, which you say are the ones Google was always punishing. Since it wasn't doing so or rather not doing so effectively, Penguin came around. Mind you, by links I mean not just the type of sites, but the anchor text too, the whole package.
how do you explain sites that did well before link building...and then after link/building penguin dropped far below where they were at before link building
It is not that you dropped to a position lower than what merits, but other sites in the meantime (during the time links were built to your site) gained links and moved up and new sites came about.
Plus we have some limited stories about Penguin recoveries from link removal
Since almost everyone believes that way out of Penguin is to remove links, do we have this situation where we haven't heard of any recoveries. Isn't it quite possible that we haven't had any recovery because our approach was wrong all these days?