Our first meeting after the AGM proved a rather more cautious affair following news of the 41 per cent annual increase in the value of our shares. We decided it was time to do some pruning of the portfolio.
Our first priority is to balance up our portfolio by not having it too weighted in favour of one share - so we decided to sell half our stake in ARM, a stellar performer from the hi-tech sector. We also considered selling some of our shareholding in Oxford Glycosciences but, as the shares are only just above the price at which they floated on the stock market two years ago, we reckon there's a lot more value left in them yet.
Next up for consideration was Carlton Communications. We worry that Carlton's involvement in ONdigital is not going well. Carlton is gambling that its stake in ONdigital will be the group's salvation in the internet-driven multimedia age.
Carlton makes stacks of money from duplicating cassettes and processing cinema film, both of which are under threat from the digital warriors. Carlton has also had big problems in its TV companies, even though they're very successful. Sadly, ONdigital looks to have more than a few troubles. We decided to sell.
But media is important so we decided to buy another television company, Border TV. Border isn't cheap, but it is interesting. Sooner or later ITV will be composed of just two big TV companies, and neither of them will be Border.
Although its TV arm will be taken over, Border also has a huge investment in radio. We like radio, which is going to be transformed by the advent of digital technology. It will make someone huge amounts of money.
We have also decided, with much regret, to sell our shares in the Rolls- Royce aerospace group. We only bought these a few months ago but, despite a pretty steady stream of excellent news, the share price has slowly deflated by as much as 10 per cent. We really do think Rolls-Royce is a great company but you have to ask some tough questions: if the Rolls-Royce share price falls at the height of a five-year-long bull market, when will it pick up? Deep down, I suspect the City just doesn't like companies that invest huge sums in R&D and go head-to-head with giant American competitors. We may think it's callous and short termist but it's City sentiment that determines share prices.
To our two other big transactions. Neither Dialog, the information company, nor TransTec, the engineer, has done us proud. What to do with them? Choice one is to dump them - but when the share price is so low we won't get much back. And anyway, we still (sort of) believe in both companies.
Choice two is to leave them as they are and hope they'll pick up. Choice three is to take a gamble. Double your stake and double your chances of big gains. We've decided to double the admittedly reduced value of our holdings in both companies.
The logic is simple though risky. If we're right, these companies' share prices will swing back up sharply when a) Dialog finally deals with its debt problems and b) TransTec finally produces some interim results which show that it still can make decent profits in a recession.
The Far East has always interested us, and we've wanted ways of buying into the recovery story there. The one country that seems to be going great guns in reorganising itself fast and shedding idle businesses is South Korea. There aren't many ways of getting exposure to the market other than through unit trusts. Save & Prosper's fund is one of three focused on Korea and has the best performance.
All of which leaves us in an interesting situation: we have lots of cash. So what should we do with it?
A recent monthly broker's summary from Killik & Co said it all for us. Killik tends to stand on the rooftops and shout very loudly about growth- oriented shares like ARM or Psion, but even it has been counselling extreme caution. It is better, the thinking goes, to have a large pile of your money in cash ready to pick up bargains. The first key barrier Killik identifies is the 6,000 FT-SE 100 mark. When that's broken, it expects a bottoming out at around 5,700, triggering a whole load of buying opportunities.
And there are plenty of shares on our watch list. Stat-Plus, a steady, reliable stationery company supplying the legal world, is interesting, as is an investment trust concerned with hi-tech venture capital start- ups, Prelude. But there's nothing to lose at the moment from keeping your powder dry and waiting for bargains to present themselves.
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