Derek Pain: Given time, shares will always rise from the pits of despair

No Pain, No Gain

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.

yourmoney@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Travel
travelWhy Japan's love hotels are thriving through an economic downturn
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Life and Style
Alexander McQueen A/W 2014
fashionPolitics aside, tartan is on-trend again this season
Arts and Entertainment
Rapper Jay Z performs on the Pyramid Stage at Glastonbury in 2008
musicSinger sued over use of the single-syllable sample in 'Run This Town'
Sport
Joel jumps over the board...and into a giant hole
footballFrom joy to despair in a matter of seconds
News
i100
Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC
tv

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me
tv

Actress to appear in second series of the hugely popular crime drama

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week