When you want to bring a point across it is sometimes helpful to accompany it with an anecdote or an interesting piece of trivia.
Investment professionals, these days, like to use the tale of how the Chinese word for crisis, weiji, is compiled of two characters, which separately supposedly mean danger and opportunity.
The moral of the story is that every downturn provides an opportunity to create wealth.
One of the more spectacular opportunities coming out of the recent global financial crisis could be found in the Australian equities market, according to RBS Equities (Australia) analyst Greg Goodsell.
In a report published last week, Goodsell identified no less than $45 billion worth of takeover candidates by market capitalisation.
"As the global financial crisis continues to recede, we believe we are about to enter into an investment/M&A cycle in the market," Goodsell said in the report dated 15 September.
"Balance sheets are lowly geared, asset values are off their peaks and management will be starting to think of expansion rather than survival."
The agricultural and energy sectors especially contained many candidates, he said.
"We believe acquisitions are more likely to occur in sectors delivering product that the world is structurally short in. In particular, we believe the agriculture sector in Australia will be consolidated over the next few years: the world is short food," he said.
"Similarly energy, another area of global shortage, is a sector facing change, making the remaining independent coal producers in Australia {attractive] candidates also."
The takeover list contains companies such as Macarthur Coal, Foster's Group and potentially IOOF, if the company can consolidate the large number of wrap platforms it has acquired in recent years.
This impending avalanche of takeovers is good news for superannuation funds, which have on average a 30 per cent to 35 per cent exposure to Australian equities.
Because takeovers usually take place at a premium to the market price, a wave of consolidation could lead to some easy profits.
But the question is, of course, how many of these companies will actually be taken over?
After all, when something sounds too good to be true, it usually is.
It is the same with the parable about the Chinese word for crisis.
Although the word incorporates the character ji, which is also found in the word jihui, the Chinese word for opportunity, the character in itself does not refer to an opportunity at all.
The ji of weiji actually refers to an incipient moment or crucial point from which changes will occur, and weiji refers to nothing else than a dangerous event.
Or to quote University of Pennsylvania professor of Chinese language and literature Victor Mair: "A weiji in Chinese is every bit as fearsome as a crisis in English."
Hopefully, the predictions of a takeover frenzy will not turn out to be an urban myth.
