It may be a nice problem to have, but even companies with healthy finances face a quandary: should they pursue acquisitions and invest in new projects now or wait for clear signs of a lasting recovery? On the one hand, the growing range of attractive—even once-in-a-lifetime—acquisitions and other investment opportunities not only seems hard to pass up but also includes some that weren’t possible just a few years ago. Back then, buyers faced competition from private-equity firms flush with cash, governments applied antitrust regulations more strictly, and owners were less willing to sell. What’s more, investments in capital projects, R&D, talent, or marketing are now tantalizingly cheaper than they have been, on average, over the economic cycle. On the other hand, many indicators suggest that the economy has yet to hit bottom. Companies that move too soon risk catching the proverbial falling knife, in the form of share prices that continue to plummet, or spending the cash they’ll need to weather a long downturn.

Timing such moves is bound to be difficult. How quickly the world economy returns to normal—and indeed, what “normal” is going to be—will depend on hard-to-predict factors such as the fluctuations of consumer and business confidence,...