Derek Pain: Who wants to play Footsie forecasts for 2009?
No Pain, No Gain
Saturday 10 January 2009
I am hopeful that the battered No Pain, No Gain portfolio will stage a recovery in the months ahead. We must all realise by now that 2009 is going to be a tough year. The unanswerable questions are: just how bad will it be; and how long before the bitterly cold environment starts to get a little warmer?
There is no doubt that shares are, on accepted measurements, exceptionally cheap. But many indicators, such as earnings and yields, now give a false impression. It is blatantly obvious that profits are under intense pressure and that many dividends will be cut, even erased altogether. With high-street institutions offering skimpy returns to depositors, a share on a mouth-watering yield is clearly suspect. After all, in my younger days it was accepted that high yields indicated high risks; such thinking would have served many savers well last year.
The fear factor, and the nation's dire trading outlook, are not surprisingly forcing many investors to keep their powder dry. They realise that shares that are cheap today could be even cheaper tomorrow.
Nevertheless, fraught days offer bargains for the buy-and-hold brigade. As I have said before, it is virtually impossible to judge the point when shares are at their lowest. Capturing stock near its bottom is an achievement. So there is no rush to buy, and time is on our side. My guess is that in the not too distant future it could become increasingly apparent that buying opportunities beckon.
Last month, I listed some of the shares that could join the portfolio. Two of them, Healthcare Locums and Marstons, have since made considerable headway. However, they have not moved out of my compass zone and I could descend on one, or both, of them in the near future.
I am inclined to go along with the view that the first half of this year will be unrewarding for most investors, but that there could be a significant improvement in the second six months.
The nation's punditry is convinced that dark days lurk ahead. In stock-market terms, an optimist is someone prepared to suggest that the Footsie will end 2009 above 5,000 points.
My own forecasting record is appalling. Since this column was launched nearly 10 years ago, I have occasionally been on the right Footsie track. But I was completely wrong- footed last year, predicting that the benchmark index would finish near to 6,400 points.
I suspect that someone, somewhere, guessed that the Footsie would end at around what was its ultimate 2008 resting place – 4,434. My recollection is that the lowest estimate I encountered was 5,800, with some brave souls shooting for 7,200.
Still, nothing ventured, nothing gained. In spite of my poor record in the hazardous activity of prediction, I offer my Footsie forecast – around 5,300. Please do not take this too seriously, but I find that there is a high degree of satisfaction in being able to take a relatively optimistic view in these deeply depressing times. Although, last year, the Footsie's constituents suffered their biggest fall on record, and the others making up the top 350 index were also savaged, utter carnage occurred among small caps. Indeed, they were battered unmercifully even before the leading counters felt the full force of the credit crunch.
The small-cap bloodbath has shown little sign of easing, and further damage could be inflicted in the months ahead. That is why I am not rushing to strengthen the portfolio. But I don't think it will be long before I venture forth. Some bargains do look irresistible, even in the economic gloom.
There is no doubt that the portfolio is in need of some additional constituents. Its membership is down to 11. I am not a devotee of the stop-loss system, but I must admit that putting sell prices on two of my top performers, Goals Soccer Centres and Prezzo, allowed me to record handsome profits. My regret is that they had surrendered so much of their gains before I ditched them.
Goals was sold at 300p against a peak of 444p and a buying price of 125.5p; it is now around 155p. Prezzo departed at 60p, compared with a high of 94p and 17.25p when it was recruited; the current price is 27p. A few similar winners would certainly give the portfolio much-needed strength. Let's hope I descend on such uplifting performers before this year ends.
Diving in at the deep end is no excuse for shirking the style stakes
Consumers given power to choose a green deal
Mark Dampier: A safe harbour if the market recovery has overreached itself
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
- 1 Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Day In a Page
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
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square