BUYING good stocks during troubled times can lead to spectacular gains. Some of the biggest returns I have ever earned came from shares of solid companies purchased in the wake of financial crises and recessions.

Buying troubled stocks is another matter, even during the best of times. When a company is suddenly beset with difficulties out of the blue, it is often difficult to figure out how quickly they will be resolved and the extent to which the long-term value of its shares will be affected.

There is never a shortage of buyers at the right price, of course – markets are price discovery machines.