The Share Market’s Greatest Gift

The Global Financial Crisis for the US share market began on 11 October 2007. Back then, the S&P 500 hit an intraday high of 1,576 before declining 57.3% to its intraday low of 673 in Mar 2009.

On the local front, the Straits Times Index (SGX:^STI) didn’t do any better; hitting a high of 3897 on the same day in October 2007, before proceeding to drift to a low of 1455 in Mar 2009.

However, with the tough times for both share markets, the greatest gift of the share market was created.

The gift of 2008 and 2009

Speaking of tough times, my fellow Fool Ser Jing wrote about the US fund Voya Corporate Leaders Trust, and its investment approach in a previous article. Below is an excerpt:

“Voya Corporate Leaders Trust was established in the middle of the Great Depression with the idea that if companies could prosper even in those tough times, they could stay strong forever.”

If the sizable drops in the share market (during the Global Financial crisis) provided something, it gifted vital real life data on how incumbent companies would perform during a recession. These might be the kind of data which Voya Corporate Leaders Trust used in its search for the companies which could prosper even in tough times.

To demonstrate this, I would like to share four of my current share holdings, and how the quartet performed in 2008 and 2009. Below is a summary of the revenue growth and earnings-per-share (EPS) growth for the companies during that time:

greatest gift of the share market

Source: Morningstar

In short, all four companies managed to grow both its revenue and EPS substantially despite the weak economic environment in 2008 and 2009. But how did the quartet do in terms of share price? Below is a summary:

Company Date Purchased Cost basis Closing Price (30-09-2014) Returns to date
Apple Inc. (NASDAQ:AAPL) 10-06-2010 $35.00 $100.75 187%
Priceline Group Inc (NASDAQ: PCLN) 17-05-2010 $199.48 $1158.58 481%
Intuitive Surgical, Inc. (NASDAQ: ISRG) 13-10-2010 $283.00 $461.82 63%, Inc. (NASDAQ:AMZN) 09-06-2010 $120.05 $322.44 169%

Source: Google Finance; Returns to date are excluding dividends

The keen-eyed Foolish reader will note that the shares were purchased in 2010, and not during the depths of the Global Financial Crisis.

Therein is another key point to make. The greatest gift of the share market is not just the low share prices during the recession, but also the real life performance data points which can be easily accessed by any individual investor. These performance data points might just make up the criteria for an initial list of companies to study.

It is truly a gift that keeps on giving.

On the local front, my Foolish colleague Ser Jing has pointed out similar examples, such as Raffles Medical Group Ltd (SGX:R01), Dairy Farm International Holdings Ltd (SGX:D01) and ARA Asset Management Limited (SGX:D1R). In view of the trio’s respectable performance during the Global Financial Crisis, it might be worth to study further.

Foolish Bottom Line

To find the most resilient companies in the Singapore share exchange, the Foolish investor does not have to make guesses, or assumptions on the performance of companies during rough times. After the Global Finacial Crisis, that data is readily available to retail investors like you and me in the annual reports, and financial information of companies.

Arguably, nothing might be more convincing than to observe a company’s performance during the Global Financial Crisis. As such, in my book, this is the greatest gift of the share market, which can be studied for years to come. Grow your wealth in the years to come with a FREE subscription to The Motley Fool’s weekly investing newsletter, Take Stock SingaporeSign up here!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in ARA Asset Management, Apple, Intuitive Surgical, Priceline Group and