Derek Pain: Out with the old and in with the new ahead of year of opportunity
Iintend to make some significant changes to the no pain, no gain portfolio. The new year provides an ideal opportunity for such an exercise which will, I hope, allow my little collection of shares to face the vicissitudes that probably lie ahead.
Progress in the past year was not as strong as I had hoped. True, profits moved ahead. But the advance should have been more compelling. Perhaps some ins and outs will have the desired impact.
My guess is that shares will again make headway this year although the going is likely to be exceedingly tough. The Footsie index could, I believe, close 2011 at around 6,300 points. Attempting to predict is always a hazardous exercise and the observation that there are only two kinds of forecaster – those who don't know and those who don't know they don't know – is never far away. Many believe that attempting to predict Footsie's level in 12 months' time is a waste of time (and space). Still, its an exercise I have attempted, with varied success, for many years and I do not see any reason to switch off now.
The economic outlook is not encouraging, with consumer spending under increasing pressure, There is also the possibility that many companies will only be able to increase profits by again slicing costs and not through growth. Hardly a happy prospect. But the stock market always endeavours to look ahead. There could well be some indications that the world's economy is really on the mend as the year progresses and shares should respond to any prospect of happier times. Such an improving atmosphere could provoke a revival in corporate activity which would add fuel to any recovery.
But a collapse of the euro – a distinct possibility – could destroy any wellbeing. Although, in the long run, the demise of such a controversial and politically inspired currency, would be beneficial, the short-term ramifications could be huge, shattering confidence in stock markets around the world. With so much uncertainty abounding I feel obliged to reshape the portfolio. I am dumping Printing.com and Private & Commercial Finance. The departure of Printing.com is rather sad. It is the longest serving constituent, having clocked six years of membership. But I fear there is a grave danger that the dividend will be cut this year. Profits are declining and in the current atmosphere I cannot see much hope of any trading improvement. The hearty dividend yield, around 8 per cent, represents the main prop for the shares. The possibility of a modest payment reduction may already be factored in to the share price but reality could have quite an impact. PCF's horizons seem limited. Quite simply my patience is exhausted.
I am also looking closely at a few other constituents, mainly Hargreaves Services and Mears. Both are well run. Hargreaves is one of my current successes but its exposure to the coal industry in this all-enveloping age of global warming hysteria could herald problems. Mears social housing and home care activities should not be pressurised by the Government's spending cuts but the stock market appears far from convinced that the group will escape the axe. The shares are highly rated and, like Hargreaves, offer a thin dividend yield. NCI Vehicle Rescue could also go – the belated interim figures were not encouraging.
Such a shake-up would leave some gaping holes in the portfolio. The relegation of Printing and PCF would reduce its strength to 12. If Hargreaves, Mears and NCI are also ditched – and I have yet to decide – only nine will be left standing. Recruits are essential, particularly as my favoured number is 16 shares.
In November I mentioned that I am minded to enlist Avation, an aircraft leasing group, and the Capital Pub Co. with around 30 mainly freehold outlets in and around London. A few others are also under scrutiny. They include Wm. Morrison, the supermarket chain, Ladbrokes, the betting group, and Lamprell, an oil equipment and servicing group.
Should Morrison join up it would represent a link with the portfolio's infant days, nearly 12 years ago. For one of its constituents then was the Safeway supermarket chain, victim of a hostile Morrison take over. The action, however, was not a great portfolio result.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
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