Derek Pain: It's not always about chasing the quick buck – patience pays off, too

No Pain, No Gain

Patience is an often overlooked investment virtue. Yet it is a necessary asset for buy and hold investors – an increasingly ignored and derided contingent in these days when the stock market is apparently dominated by short-term vultures. The furore over the Cadbury takeover is the latest high-profile example of the quick-turn mentality. It was not only hedge funds that delivered the British confectioner into US hands; it seems many other investors, big and small, played the fast-buck game, making continued resistance impossible.

Short-termism is as old as the hills, but in these high-tech days it is a game that is much easier to play. With so many day traders now glued to their computers, they, together with hedge funds and in-and-out institutions, completely overshadow old-fashioned buy-and-hold investors.

Of course, shareholders should always remain alert. Sometimes even the most laid-back should call time on an investment. Indeed, the No Pain, No Gain portfolio has, too often, been guilty of hanging on to ailing shares. Lennox and Pubs'n'Bars represent disastrous excursions. But it can pay to persevere. Rentokil Initial and Lo-Q are at opposite extremes of the investment world. One has a £2.5bn capitalisation; the other just £21m. In recent years both have been under intense pressure. A series of trading calamities sent Rentokil shares, once constituents of my portfolio, tumbling to less than 50p from about 170p. New management has since dramatically revitalised the pest control to parcel delivery group and the shares are now approaching 140p.

Lo-Q, producing devices for cutting the time spent queuing at theme parks and elsewhere, must have even more sorely tested the patience of its long-term investors. The shares were floated in 2002 at 100p and I recall attending the launch party at a posh City restaurant; hopes were high that the shares would soar. They did touch 115p, then came a long, painful decline. The price finally settled at a miserable 3p before recovery set in. With profits of £2.4m, helped by more Americans holidaying in their own land, the shares are now at about 130p.

I have said many times that playing among small caps can be a risky activity. It is so easy to descend on losers; winners (and they can provide spectacular rewards) are more difficult to locate. I wonder how many early shareholders in Lo-Q stayed the course? Their brave endurance certainly deserves applause.

Lo-Q may be an outstanding example of patience paying off, but there are many more buy-and-hold successes at both ends of the market. A recent trawl through the top 350 companies by Investors Chronicle produced dozens of examples of returns of at least 100 per cent over 10 years. The biggest gainers were resource groups which, it could be argued, managed to strike it lucky. Randgold Resources was top, scoring a 3,500 per cent gain. But the "real" world enjoyed hits. Chemring, Domino's Pizza and Aveva were each above the 1,000 mark. And staid Robert Wiseman, operating in the unglamorous world of milk, recorded a 516 advance.

Buy-and-hold shareholders may be regarded as the dinosaurs of the investment world but their laid-back approach, which is an anathema to commission-hungry City dealers, is obviously capable of reaping rich rewards without the aggravation of hyper activity and incurring heavy dealing costs.

The portfolio is a long-term investor. Mistakes have been made, but overall it remains in profit with a £200,000 investment producing a near £100,000 gain. Dividends (and dealing costs) are ignored in my calculations.

Finally, I have completed my hunt for a new Footsie constituent and G4S, the security group, has joined the portfolio. I recruited the shares at 264p. Security, in these uncertain times, is clearly a growth business and G4S, the result of a merger between Securicor and a Danish group in 2004, has an impressive record.

Profits last year emerged at £302.8m and Tony Shepard at stockbroker Charles Stanley is looking for £393m this year. Although the shares have had a good run, they are not expensive and I feel will rest comfortably in the portfolio. I am still keen to recruit another share, probably a small cap, to lift membership to 16 – the ideal strength.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?
    How Tansy Davies turned 9/11 into her opera 'Between Worlds'

    How a composer turned 9/11 into her opera 'Between Worlds'

    Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
    11 best bedside tables

    11 best bedside tables

    It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
    Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

    Italy vs England player ratings

    Did Townsend's goal see him beat Kane and Rooney to top marks?
    Danny Higginbotham: An underdog's tale of making the most of it

    An underdog's tale of making the most of it

    Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

    Steve Bunce: Inside Boxing

    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat