Derek Pain: Some signs of hope for my bedraggled bunch

No Pain, No Gain

It's been a disastrous year for most investors. I am distressed by the lamentable performance of the No Pain, No Gain portfolio. Sadly, it probably mirrors the experience suffered by a multitude of stock market players. Only nimble-footed traders, short sellers and the exceedingly fortunate have managed to score this year.

The portfolio, thanks to past successes, is still showing a gain. Even so, the present constituents look a bedraggled bunch. I can only express relief that I unloaded Goals Soccer Centres, Myhome International (first time around) and Prezzo at what in these flat days must be regarded as handsome profits

And the portfolio doubled its money when brewer Scottish & Newcastle was gleefully swallowed by the Euro combination of Carlsberg and Heineken. But I failed to avoid some bruising blows. Venturing back into Myhome cost a packet and the portfolio was deeply out of pocket with the Food & Drink Group.

In the past few months the portfolio's profit has dwindled from £99,000 to £79,000 on a £200,000 investment. Hardly the return I had hoped for as my share adventure nears its 10th birthday. As I ruefully pointed out last week, the gain approached £150,000 some 18 months ago.

Only two constituents – Hargreaves Services and Printing.com – are still in the black. Their gains are modest. At one time Hargreaves touched 650p and Printing.com, now offering a 10 per cent yield, nudged 75p.

I am reluctant to give any member of my struggling crew the old heave-ho. Wyatt, the online support group, is the most obvious candidate. But I have left it too late for such drastic action. And, intriguingly, there are signs that things could get better. Last week three directors, chairman Bob Holt, David Robertson and Reg Pomphrett, pumped £50,000 into the business through unsecured loans. Holt, who also heads Mears, another constituent, had already loaned £100,000 to help the acquisition of an employee benefits consultancy called TEBC. This boardroom cash support indicates, I believe, that hard-up Wyatt is making headway. Another take over appears to be near. In its last financial year profits were overwhelmed by losses from discontinued activities.

To pile on the agony tax changes have this year impacted on Premier Employment Solutions, the off-shoot responsible for last year's trading profit. So a pre-tax half year loss of £367,000 (£174,000 profit) was announced this week. But a much improved performance is expected to materialise by early next year.

Other constituents have traded well or at least lived up to expectations. Whitbread, the old brewer now into budget hotels, coffee shops and pub/ restaurants, rolled out a strong trading statement, and Mears, the social housing and home-care group, has let it be known it is on its way to meeting City profit forecasts of around £20m.

This week Private & Commercial Finance, the hire purchase group, produced a 15 per cent interim profit advance to £496,000. The group seems to be living quite comfortably in the sub-prime environment. Chairman Michael Cumming talks about "highly promising" opportunities for new business to be gained on favourable terms. Even so, year's profit forecasts have been pulled back from around £1.1m to a little under £1m. The shares rose 2p to 13.5p but are still well below my 19.5p buying price. Internet tipster Tom Winnifrith says the shares are on a "derisory" rating.

Directors taking advantage of downtrodden share prices has been noticeable. Despite disappointing interim profits directors of Lighthouse, the financial services group, have been active. And light boardroom buying has also been evident at English Wines Group and Pubs 'n' Bars.

Booker, the cash and carry chain, remains under the shadow of a 22 per cent overhang following the Icelandic difficulties and Nighthawk Energy continues to suffer along with other junior resource shares. Still in some quarters, oil and gas shares are seen as the hot stocks of 2009.

Most of us will be glad to wave goodbye to this year. The trouble is it could take many years before Britain's economy fully recovers from 2008's crash. The latest setback in the US must represent yet another savage blow to confidence and could prompt further selling, hindering any stock market improvement. However, I remain cautiously optimistic that it will perk up in the second half of next year.

The bear market has lasted some 400 days. Others have run for longer. The 1970s crash, so akin to our present woes, continued for 608 days. Then shares fell 70 per cent; so far the toll this time round is a mere 46 per cent.