7 year returns on BHP, FMG and RIO

Trevor Sykes writing for the Fin Review yesterday suggested that BHP is a red hot buy.  His main argument centred on cashflows and that its investing outflows are largely voluntary.  He states that if BHP stopped investing altogether for a year they would be "knocked over by the wall of money."

Not that the market seems that interested this morning.  With the spot price of iron ore down again they are drifting around the $20 mark.

Seems like the main game everyone is playing is trying to "pick the bottom" of the BHP share price.  Seven years ago in the depths of the GFC the share price briefly touched the $20 mark before doubling in price over the next few years.  That low was also at the end of November almost seven years ago to the day.

Here is a chart showing where the share price has gone since.

Source: Yahoo Finance

So where would we be today if we invested in some resources companies seven years ago.  Pretty much back where we started.  This chart shows how your returns on BHP, RIO and FMG would have fluctuated over the seven year time frame.

Source: Google Finance

With FMG you would still be slightly ahead and there would have been plenty of opportunities to sell out at a 200% or more return.

BHP, despite their current woes, has consistently outperformed RIO on the seven year time frame.