Is the problem temporary or long-term?You must be careful not to simply invest in a company because everyone else is running from it; sometimes there is reason to run! Even after the share prices of companies such as Lucent and United Airlines had been cut by seventy-five percent, they still did not constitute a good investment. There are many companies that aren't worth buying at any price. Trash is trash, regardless of how much you pay for it.
In some cases, problems arise that are the result of one-time mistakes on the part of management. During the Savings and Loan crisis, for example, bank stocks were beaten down to almost comical levels. An investor who mentioned he was purchasing shares of these institutions was immediately scorned, mocked, and considered crazy by even close friends. At the same time, firmly entrenched companies such as Wells Fargo (which boasted a solid balance sheet, established reputation, top-notch management, and steady customer base), were hit just as hard as banks of lesser quality. Years later, those that had exercised courage and relied on their analytical judgment by purchasing shares in such banks found their portfolios much fatter. Remember the words of a very wise man; "you are neither right nor wrong because the crowd agrees with you; you are right because your analysis says so."