Caroline Ritchie: Opportunity still in face of recession

Come on down, the price is wrong! Food prices, petrol prices, uranium prices. Well maybe not the price of uranium, that's taken quite a beating lately. But the other two seem to be trapped in an ever increasing spiral of expensiveness.
The cost of living in our antipodean paradise is becoming a larger and larger slice of our take-home pay, so what can we do about it? Not too much, as the chance of one small nation swaying world markets is tiny, but perhaps an inspirational story is in order.
We could take the Sir Richard Branson approach. The Virgin founder, entrepreneur and stylish multi-millionaire says that a lot of his success is due to expansion during recessions.
There is also a much more powerful, underlying thematic to his success, which is the strength of business positivity. It's easy, he says, to blame the credit squeeze at the bank or the macro-economic situation when your business performs poorly.
He says we need to take responsibility, suck it up and look for solutions, not more problems. Sounds easy from one of the world's richest men, doesn't it? But he's only human too. After the inaugural flight of Virgin Atlantic from London to Newark, a big gamble, adversity struck.
Branson arrived home, slightly worse for wear - the first flight had been fuelled by aviation gas but also by 70 crates of champagne - to find the bank manager on the doorstep.
The one large line of credit, without which it was not possible to be running an airline, was not being extended as promised. No bank credit would mean no suppliers, no food, no fuel, no staff and no airline.
No airline would mean no Virgin Group, full stop. The problem was fixed, fast, but not without stress and offshore business sales. There was no wallowing in the hopelessness of the situation. No time.
One weekend on the telephone and voluminous smooth talking later, the bank had its overdraft repaid. And Virgin closed its account at that particular establishment.
The position we have in New Zealand now is different from past episodes. We have commodity price inflation, but not the economic growth nor general wage increases to match it.
Part of Branson's strategy during economic weakness was to buy great assets that were very, very cheap. We haven't seen a huge downturn in property or land prices, and consequently can't enjoy indulging on such discounts, excepting the sales to be found in the receivership bin. The real question is whether this time is just around the corner, or has perhaps New Zealand luckily escaped the asset deflation that has beggared better economies?
Caroline Ritchie is an NZX adviser for Forsyth Barr in Napier and holds an NZX Diploma, BCom and BSc. For sharemarket advice contact her on (06) 835 3111 or caroline.ritchie@forbar.co.nz.
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