we all know the old mantras of survivinge a market panic: stay in the market, stay diversified and trust the magic of compound interest. But the client who calls up concerned that his portfolio is down a third or a half may not find your recitation of the ancient truths particularly reassuring—especially if your letterhead changed in September.

What might make your reassurances a bit more successful is some sign that you're really thinking about this new era and not simply hunkering down until the market improves. Here are a few lessons that some veteran analysts have already drawn for advisors to keep in mind.

• Keep it simple. The collateralized debt obligations that ultimately killed the investment banks were at least two steps removed from the underlying collateral, such as credit card debt or commercial mortgages. In many cases, analysts became so reliant on their mathematical models to evaluate credit quality they didn't consider that there might be risks outside the ones their models turned up. As credit analysts Mark Adelson and David Jacob said in a paper earlier this year: "Math can find risks, but it cannot find safety."
• Question authority. As in the dotcom boom, investors put too much faith in experts. "After everything is said and done, you realize that the core problem was a mis-assessment of underlying credit quality," says Sean Egan, co-founder of Egan-Jones Ratings Co., a credit rating agency based in Wynneburg, Penn. People differ about the causes of that mis-assessment. Adelson and Jacob, who have both joined Standard & Poor's since writing their paper, argue that some of the problems stemmed in part from the fact that CDO experts at many firms disregarded their colleagues who actually understood asset-backed and mortgage-backed securities risk.

Egan, on the other hand, points to the rating agencies as the guilty party. He holds that the fact that 95% of the major rating agency revenues come from the issuer, gives them an incentive to be more generous in their rating than the securities deserves. (It should be noted that Egan-Jones has a vested interest in this argument, being an agency that makes its money from institutional investors.)

• Don't bank on a mark-to-market value. You can't count on mark-to-market assets to maintain their recorded values. It's difficult for companies to estimate the value of certain kinds of assets they hold, such as mortgage-backed securities. That's especially true if there isn't a strong secondary market for the asset, or the market is beaten down, the model is limited, or the securities have the reasonable potential to produce very divergent outcomes, such as a 100% loss or a 100% gain, say Adelson and Jacob.
• Leave a margin of error. Confident that the AAA-rated securities they were buying were truly AAA, the investment banks leveraged themselves up as high as 35-to-1, putting down about three cents for every dollar of assets, according to Egan. That was fine as long as the assets were performing. But when they hit a bump, the investment banks blew up.

As with anything in the market, today's environment can be good news or bad news, depending on where you stand.

In market panics of this kind, pressure in one part of the market can lead to damage in an unrelated part of the market when portfolio managers find themselves obliged to sell securities in order to raise cash to meet a margin call or a demand for a redemption from a client.

But for someone with cash, these dislocations are creating some extraordinary bargains. "Right now we're seeing more really interesting investment opportunities than I've seen for years," says Rob Arnott of Research Affiliates.