The GFC is almost over for investors

The ASX – including dividends – is almost back to the pre-GFC highs

Scott Phillips (TMFGilla)

Scott Phillips is The Motley Fool’s Chief Investment Officer in Australia. He is Advisor of The Fool’s flagship investment service, Motley Fool Share Advisor and the Portfolio Manager of Motley Fool Everlasting Income and Premier Portfolio, as well as running our most premium service, Motley Fool Platinum. He is passionate about investing, having managed his own portfolio for over 15 years. A dyed-in-the-wool Fool (in the best way), he has been a member of The Motley Fool since 1999. Scott holds a Bachelor of Commerce (Management) and a Graduate Diploma of Accounting. Before joining The Fool, Scott worked in various Sales and Finance roles in industry, which has allowed him to see the good, bad and the ugly of corporate management close-up. Giving him a great understanding of the way businesses run – and what separates the business wheat from the chaff – Scott wholeheartedly agrees with Warren Buffett when he said he was a ‘better investor because I am a businessman and a better businessman because I am an investor’. Scott left a successful career to follow his passion – helping our members achieve the best possible investment returns, and helping Australians learn to better manage their money. It’s no surprise he ended up at The Motley Fool.

Published August 14, 2013 8:15 am AEST

Most investors will remember the GFC with some disdain. Many went to cash and missed the recovery, while even a fair proportion of those who stood firm are still nursing some losses.

According to S&P CaptalIQ, the ASX / S&P 200 (ASX: XJO) (Index: ^AXJO) peaked at 6,828.7 on November 1st, 2007. The benchmark now stands at 5,157.7 – some 24.5% below that all-time high.

Of course, history will show that 2007 was a period of irrational exuberance, but it's also true that very few people saw the GFC on the horizon.

The market did hit a low of 3,145.5 in the wake of the GFC, so the recovery, at least in percentage terms, has been impressive – a gain of 64%, excluding dividends.

Helpfully, CapitalIQ also provides a view of that same index with dividends reinvested. On that scale, the index is a mere 2.4% below breakeven for investors – not a bad result (but not exactly spectacular) and a much better view than you'll get from the raw numbers.

Of course, picking high and low points is an exercise in cherry-picking. Taking a longer-term perspective, we see the ASX 200 up 64% over the last 10 years in price terms alone, and a much healthier 153.1% when dividends are included.

And it wasn't all bad news. Over that same 10-year period, Computershare (ASX: CPU) rose 410%, Energy World (ASX: EWC) put on 2,140% and the company behind realestate.com.au, REA Group (ASX: REA), gained 8,900%.

Foolish takeaway

In this Fool's opinion, trying to time the market is a mug's game. Very few people foresaw the GFC, and of those who did, I expect a very, very small proportion will accurately forecast the next slump. In the end, the old methods are best. Finding great companies and paying attractive prices pays off.

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Motley Fool advisor Scott Phillips does not own shares in any company mentioned in this article

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