Even with trouble on the horizon, companies can still produce wonderful gains.
Now you may already know this, but the more I study the stock market, the more I realise big share winners can come in all sorts of shapes and sizes...
...and the more I believe trying to gauge the economy, the euro and other 'top-down' hot topics might just paralyse my portfolio and create zero-return inaction.
Five-year flashback
Take a trip back to the end of 2006. It was a time when the FTSE 100 traded at 6,220 and the headlines had yet to be filled with sub-prime American mortgages, let alone Northern Rock, Lehman Brothers, Royal Bank of Scotland (LSE: RBS), Greece and the current eurozone mess.
A major crash was about to start -- not that many people really foresaw the FTSE free-falling towards 3,500 -- and even now, the market remains about 13% lower five years on.
On the face of it, the end of 2006 was one of the worst times to commit to long-term investing, especially when amateurs such as me were even sensing trouble looming for builders, banks and buy-to-let.
But when I actually checked the facts, I was surprised to discover the handsome share-buying opportunities that existed five years ago.
100% capital gains
You see, of the 573 shares currently in the FTSE All-Share that were trading at the end of 2006, some 225 (39%) have since delivered a capital gain. I think that's quite a healthy proportion, especially given the market turmoil we all suffered in the meantime.
But more importantly, almost 80 of those 225 names generated worthwhile 10% average annual gains, while almost 40 produced 15% average annual gains or more -- that is, they doubled your money or more during those turbulent five years.
These names may surprise you
Now you may already know where some of the really big winners since 2006 have emerged from. Buoyed by the price of gold, miners such as Rangold Resources (LSE: RRS) and Centamin Egypt (LSE: CEY) have, for example, delivered 20%-plus average annual returns during the last five years.
Many other resources shares have reported 20%-plus annual returns, too, including Tullow Oil (LSE: TLW) and Antofagasta (LSE: ANTO). Meanwhile, high-profile techs, ARM (LSE: ARM) and Imagination Technologies (LSE: IMG), have registered amazing 34% average annual gains.
But here are some of the more surprising names on my five-year leaderboard:
I must admit I had to double-check some of these companies to discover what they actually do.
Just in case you don't know either, Lancashire is a Lloyds catastrophe insurer, Carclo is a technical plastics group, Croda develops speciality chemicals, Senior makes components for the aerospace industry, Devro produces sausage skins and AG Barr sells Irn Bru.
Anyway, I doubt these six names looked obvious winners five years ago, and I dare say Rightmove and its exposure to property, Stagecoach and its low-growth transport operations, BAT and its low-growth tobacco business, and JD Sports and its exposure to the fickle high street, did not look stand-out buys either.
Yet they all provided 15%-plus average annual gains during a pretty rough five years for the FTSE.
Buying distraction
While the banking crash caused many companies to fail, it's clear many businesses actually did well during the recession -- and their shares responded accordingly. And those winners came from both high-growth and low-growth sectors of the market.
Looking at that table -- as well as considering all the other shares that trounced the All-Share during the last five years -- I'm now convinced spending too much time debating the ongoing financial crisis, the fate of the euro, the death of the high street -- and all the other top-down concerns -- is just going to distract us from pinpointing the very best share-buying opportunities for the next five years.
Ever the optimist
True, better buying opportunities may occur between now and 2017, but then again, maybe they won't. Nobody knows for sure, and simply sitting in cash waiting for the uncertainty to clear will never find us the really great wealth-creating bargains.
So if you're an optimist like me, all we can do is to remember how shares such as Rangold, ARM and Rightmove have prospered during this downturn -- and how buying decent companies at cheap prices today could see similar returns in the future. Despite everybody predicting further doom and gloom, the big share winners are still out there... ready to be bought today.
> The Fool's latest report has just been published! Make sure you don't miss '10 Steps to Making a Million' -- it's free!
More on the markets, shares and the economy:
> The Motley Fool owns shares in Imagination Technologies.
