No Pain, No Gain: St Leger Day is here and shares are already rallying

Investors have been obliged to endure an uninspiring summer.

Investors have been obliged to endure an uninspiring summer. Although shares have displayed a little life in the past few weeks, their overall performance has offered some support to the old stock market adage - sell in May and buy again on St Leger Day.

Well, the famous horserace is due to be run today and, at the time of writing, the Footsie is approaching its May Day level. In the meantime, it has been a case of sweat and tears with much talk that major institutions have become so disenchanted with equities that shares now account for only 50 per cent of many portfolios.

The St Leger saying, now enshrined in stock market folklore, should have no place in this modern, hi-tech age. It stems from the early days of the last century when rich investors abandoned these shores for the south of France in the spring, returning in time to watch the race. Yet anyone who adopted the St Leger approach and sold in early May could have enjoyed a carefree summer and returned to share prices a little below those they left behind.

Although the stock market continues to produce an array of lively constituents, shares as a whole have - as the Footsie so adequately demonstrates - produced little excitement. Such a lacklustre performance, I must confess, has inhibited my enthusiasm. I expected shares to move ahead strongly this year. I am still hopeful they can build on their late-summer rally.

Traditionally, September is a cruel month for equities. And past Octobers have produced some quite alarming setbacks. So, if the form book prevails, it is asking an awful lot of November and December. Still, in days gone by, the last two months of the year have produced some outstanding displays on occasions and, as a perennial optimist, I remain ever hopeful that 2004 will end with a flourish. I remain convinced that the stock market is tantalisingly cheap.

The no pain, no gain portfolio has, more or less, milled around since I last recorded its performance in July. Rentokil Initial, my last recruit, has enjoyed an eventful time with, at least, for the time being, breakeven hopes dashed.

The new chairman, Brian McGowan, has opted for the long haul, hoping to make the group's sprawling operations more profitable. If he succeeds, well and good: the shares, which nudged 300p a few years ago, should respond. Should Mr McGowan fail, then the break-up story will be back to haunt him and takeover speculation, never far away with the former chairman Sir Clive Thompson, in the wings, will again rear its ugly head.

Although Rentokil is under pressure, it is still highly profitable with £350m likely this year. The shares are selling at about 10 times prospective earnings and the promised dividend yield is 4.4 per cent. I am, therefore, happy to stick with them for the time being.

My other Footsie constituents turned in contrasting performances. Allied Domecq produced what seemed to me to be an encouraging trading update, although some were unimpressed. Scottish & Newcastle, the international brewery, rolled out interim profits indicating that the group had at last got to grips with its problems and was on the recovery road.

But then sentiment suffered when stories surfaced about promotional restrictions in Russia where, with Carlsberg of Denmark, it is the major beer player. The Russian market has been particularly strong, partly nullifying fears that Scottish is over-dependent on more mature, less exciting markets.

Its shares have certainly been a bitter disappointment since I bought them at 394p five years ago. They did at one time nudge 700p, but have since been in the doldrums. I still believe Scottish offers considerable potential, but my patience is not inexhaustible. I am also frustrated with MacLellan, the support services group. Its shares have failed to respond to its fine profit record and I am beginning to wonder if they ever will. Interim results are due later this month.

Among my other smaller constituents DataCash, a chip and pin hopeful, has continued to make headway - helped along by encouraging interim profits. S&U, the finance group, has not produced any figures but its shares have emerged from what seemed like an inexorable downward drift and recovered to 535p.

When I left for my summer break, the portfolio was showing a gain of about £35,000. That figure is now more than £38,000.