site A link to site B, and site B link to site A, will google punish this?

I am not sure since I am new to this link building thing.
I got the impression google doesn't like two site linking to each other. Am I right? I myself don't see anything wrong this way.

Why people here say "three way linking" a lot?
Confused.

Thanks for you replies.

 

don't do reciprocal or three way. get one way links.

 

Unless you do it in excess, you won't be punished for reciprocal linking.
But try to keep link exchanging to sites within the same theme as yours or at least sites that your visitors will actually have an interest in. That way you might even get some traffic from your link exchanges.

 

well, unless I pay, nobody out there is willing to give me afree link.

 

So it is really important to link exchange with site that has the same niche as you? I have some couple of site that is link to me that are of not in niche with me does it affect my pagerank? By the way am bit confused about 3 way link exchange and one way link exchange can you pls explain to me what its all about?

 

Three way is ok. In other word it is one way link back for one site.