Derek Pain: Given time, shares will always rise from the pits of despair
No Pain, No Gain
Saturday 13 August 2011
Ruthless action is being taken with the No Pain, No Gain portfolio. I have decided to ditch two shares, one a long standing constituent. The departures have nothing to do with the turbulent behaviour of the stock market, which is related to the weakness of the US economy and the expected failure of the euro.
I have always maintained that investors should consider buying shares at times of stress and strain or, at the very least, put their heads down and let the flak fly over them. Since I first began to appreciate the ins and outs of the City in the 1950s, I have experienced many shares slumps. The drip-drip of the early 1970s, the tumultuous crash of 1987 and the turn of the century collapse of internet hysteria are just some of the reverses that have occurred.
Shares have always managed to struggle out of the pits of despair. Admittedly, they have yet to regain the peak reached in 1999 but, given time, they will hit new highs. It is easy to say that shares are cheap. The trouble with such statements is that in these uncertain times they could be still cheaper tomorrow. Even so, prices are in the bargain basement, although it is always difficult to buy at the very bottom. Often a little flexibility is needed but investors who act at times of trouble and invest in established, well-run and well-funded companies, are long-term winners. The present crisis will have its ups and downs but do not be influenced by short-term considerations; it is the long view that counts.
I have always been sceptical about the EU. Indeed, I am appalled by the continuous encroachment of Europe into Britain's affairs. Thank goodness we steered clear of the ill-conceived euro, which is almost certainly doomed in its present form. Although its demise could create short-term discomfort, there is no reason to believe the eventual impact will, as some allege, be disastrous for this country. It could merely mean that we have to get reacquainted with the likes of the Deutschmark and lira.
The two shares chopped from the No Pain, No Gain portfolio this week are Clarity Commerce Solutions and Lighthouse. Both have failed to perform. At the time of writing, I am still awaiting Clarity's results, which were promised in June. It is an old City saying that it takes longer to add up poor figures than good ones. Clarity Commerce Solutions, which supplies software systems to retail and leisure businesses, has made no secret that the tough conditions many of its customers are experiencing is making life more difficult. There have been indications that contracts are being delayed, not cancelled. Even so, it seems the company's prospects have, along with its shares, deteriorated.
It was in April 2009 that the portfolio alighted on Clarity. Then the retail environment looked rather different from today's sorry mess. It is clearly well run. Its shares, purchased at 29.5p, went on to hover around the 50p mark. Unfortunately, as the extent of the retail downturn became apparent, they lost their way. I should have sold while there was still a profit. But I held on and now have to accept 16p a share.
Lighthouse, an accountancy and wealth management company, has, to my mind, done nothing wrong. Yet its shares, the longest serving constituent of the portfolio, remain deep in the doldrums. They were picked up five years ago at 17.5p and reached 35p or so. The current price is about 7p.
I am astonished at such a low appreciation. The company is profitable, pays a dividend and has cash that comfortably exceeds its capitalisation. I, and others, have bemoaned the unfair valuation but the stock market seems unable to accept our reasoning and is intent on concentrating on possible problems created by the reshaping of the financial advisory industry. It mirrors another former constituent, Printing.com, recruited in 2004. It, too, had much to commend it but the stock market insisted on a pathetic rating.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Sabina Altynbekova, the girl branded 'too good looking' for volleyball, says social media obsession with her is a 'bit much'
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Israel's propaganda machine is finally starting to misfire
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...
Day In a Page
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000