KEY POINTS:
When the going gets tough, don't get going - get smart.
If Graeme Hart had gone into his shell and stopped investing during the dark days at the start of the 1990s he'd have missed the chance to nab the Government Printing Office for a bargain price.
Then at the height of the recession in September 1991 he wouldn't have shelled out $73 million to buy Whitcoulls from Ron Brierley. In short, he might have missed his shot at the big time. Both those moves were big steps on his path to billionaire status.
That's not to say now is the time for the average investor to get adventurous. But it certainly is the time for those with savings and investments to take stock of their financial position and look at how to make the most of the next 12 to 18 months.
As the fallout from the credit crunch and global slowdown washes through the New Zealand economy, public sentiment is likely to get pretty negative.
But the really savvy investors - the so called "smart money" - know these are the times the real opportunities arise.
So what does the "smart money" think about the likely recession of 2008?
One consistent theme coming through from the experts is that investors shouldn't rush.
Many are picking that the worst of the credit crunch is over. But that doesn't mean it is completely over. There is a lot volatility left in the market as the rises and falls of the last week have shown. The property market and the stock market are likely to suffer more falls in the coming months. So there is time now to do some homework, to learn about the market and get ready for the inevitable turnaround.
Everyone who has ever pondered the stock market or the property market has day dreamed about how they might have invested if they'd followed their instincts.
Instead of wishing yourself back to 2000 - when both these markets were last significantly undervalued - here is a chance to get ready for the next boom.
High profile wealth creator Lloyd Morrison advises: "The secret is to buy in slowly and steadily set some investment targets and amounts to be invested. Don't try to pick bottoms, simply spread the purchases evenly over a 12 to 18-month period. Then sit patiently on the investments and await the return of better times."
If local investors give up on the NZX - as they did after the crash of 1987 - the risk is that it could all but disappear.
While New Zealanders are historically quick to follow big international funds out of stocks we are seldom able to beat them back in. That has led to some of the best and brightest companies being picked off cheaply by foreign investors in the past 10 years.
The big institutions around the world are cutting their losses right now and that is hurting quality stocks.
But when the tide turns the foreign buyers will return scouring the world for bargains and offering seemingly generous takeover premiums on stocks that are actually priced far below fair value.
History doesn't have to keep repeating, this time we'll be ready for them.
Liam Dann is the Herald's business editor
