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.

yourmoney@independent.co.uk

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

Suggested Topics
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tv
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
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
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence