No Pain, No Gain: Ditching shares is understandable, but is it wise?

The No Pain, No Gain portfolio has endured some punishing reverses. They tend to underline the sad state of the stock market and the increasingly fierce recessionary influences that are forcing the nation into an old-fashioned slump.

Thankfully, the portfolio is still sporting a profit, due to past successes. But the gain is down considerably from the peak of £143,000 reached last summer.

In such distressing times there is a temptation to ditch shares to snatch what is left of a profit. Such action is understandable. Whether it is wise is another matter. Often, it is best to batten down the hatches and wait for the storm to pass.

I have been writing about the City for 50 years and witnessed many ragged retreats and a few spectacular crashes. The worst, I feel, occurred in the early 1970s, when worries that the end of capitalism was imminent devastated the stock market.

Unfortunately, there are striking similarities between then and now. Soaring oil prices and interest rates plus a banking crisis (with at least one high street name being supported) loomed large in the Seventies disaster. This time round, almost every bank in the land is suffering acute embarrassment and the cost of oil has surged.

Only the interest rate picture is, at the moment, less frightening.

Still, the Seventies' despair is history. The stock market survived. And buy-and-hold investors who kept their nerve eventually reaped their reward as many shares recovered and went on to hit new peaks, despite some horrendous setbacks such as the selling frenzy that occurred in 1987.

The portfolio is not a sea of red. It contains a strong element of blue, although not one of its constituents is anywhere near its peak. Printing.com, the small item printer, is one that seems to me to have been harshly treated. The shares are bumping along at 32p, uncomfortably near their lowest point since arriving on AIM four years ago.

True, a rather cautious trading statement has prompted profit forecasts to be reduced. If current trends continue, the company is looking for "modest" progress. Consequently, stockbroker Brewin Dolphin has cut its year's profit estimate from £2.7m to £2.5m. Last year, the group produced £2.4m.

Not an inspiring prospect, I realise. But the shares are surely oversold. They now offer a historic yield of more than 9 per cent and a prospective return topping 10.5 per cent. The balance sheet is strong with cash of around £3.5m. Even in today's testing times such a high yield is astonishing.

I am not certain whether Wyatt, another constituent, should be regarded as cheap. But the shares hold a degree of promise. I have been wondering whether to dump them. They have been among the walking wounded for too long. The portfolio paid 27.5p; they are now a miserable 5p.

But two encouraging developments last week left the impression that the shares have, even in today's depressed market, been overlooked. The group has accomplished what looks like a rewarding deal and another is in the pipeline. It also produced figures rather better than I expected.

The takeover involves TEBC, an employee benefits business that should bed in happily with Wyatt's main occupation, running an employment consultancy called Premier Employer Solutions. Cost is a down payment of £150,000, plus another £150,000 over two years and further performance awards of up to £300,000.

Wyatt, with a capitalisation of only £630,000, is not flush with cash so chairman Bob Holt, the man behind the Mears support services group, is providing a £100,000 loan.

In the past year, Wyatt reshaped and losses from discontinued activities cost it dear – producing a £520,000 deficit against a £241,000 profit. But its remaining operations, largely PES, managed a profit of £415,000.

Prospects this year have been hurt by tax changes and PES is likely to experience a more subdued time. Even so, Holt clearly feels that Wyatt could establish itself as a significant player in the employment services market and is keen to add other businesses to the group. But with its shares in the dumps most vendors will want cash. That could mean a rights issue.

Wyatt is among the portfolio's worst performers. Still, I can see little point in selling. Indeed, there is a reasonable case for hanging on.

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

News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
News
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
PROMOTED VIDEO
News
Swimmer also charged with crossing double land lines and excessive speeding
News
people
News
i100
News
moneyForbes 400 list released
Life and Style
fashion
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
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

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style