The ASX has struggled to grow since the GFC, the ASX200 is still far behind its pre-GFC peak.
However, it has recently passed the symbolic barrier of 6,000. I don't think passing one barrier means it's more likely to pass another milestone, but it's interesting nonetheless.
It's important to remember that the all-time high before the crash included the mining boom which helped Australia through the GFC. As a couple of examples, BHP Billiton Limited's (ASX: BHP) share price was $44 but now it's $27 (which excludes the impact of South32 Ltd (ASX: S32)). The Rio Tinto Limited (ASX: RIO) share price was $155 and now it's $69.
When you look at the other big contributors to the index you can see that most of them have well and truly recovered. Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG), CSL Limited (ASX: CSL) are all healthily above their previous highs in 2007.
The large caps aren't the only ones that have helped the index recover. Several ASX shares that are worth billions of dollars have grown impressively over the past decade. Cochlear Limited (ASX: COH), Ramsay Health Care Limited (ASX: RHC), Challenger Ltd (ASX: CGF) and Seek Limited (ASX: SEK) have all expanded overseas and added to the index.
However, it's worth questioning if this is the best that the ASX is going to see for a while. Our share market is intrinsically linked to the Australian economy's growth.
The economic growth we have become accustomed to could be about to change if certain factors and statistics translate to problems. Debt ratios are at all-time highs, interest rates are heading up, retail spending is predicted to fall, house prices are starting to head backwards and wage growth reduces every year.
A lot of shares are trading at the highest price/earnings ratio is a long time, only good earnings growth will be able to justify those prices in the near future.
Foolish takeaway
The more expensive the market gets the more careful and picky you need to be with your investments.
