No Pain, No Gain: Why I had to kick Goals Soccer Centres into touch

I have been forced to despatch yet another star of the No Pain, No Gain portfolio. Shares of Goals Soccer Centres, the five-a-side football group, have suffered an unexplained bout of selling and fell nearly 50p in just two days, taking them below the 300p sell order I had put in place.

The stock market slide has already accounted for two other constituents, Myhome International, the franchise group, and Prezzo, the restaurant chain.

I suppose I should be grateful that I had placed fall limits on my three most profitable performers. After all, at least some of the profits the trio achieved have been locked in. Even so, the departure of such outstanding companies leaves the portfolio looking a little forlorn.

GSC was recruited at 125.5p in May 2005, so the 300p sale represents a reasonable profit. Still, in November last year the shares were standing at more than 440p. That was when I should have kicked them out.

Myhome lost its place because its shares fell below my 50p stop price. They joined at 15.5p, touching a peak of 106p. Prezzo, too, suffered a dramatic decline; at one time last year the shares were not far from 100p, compared with a 17.25p buying price. But then doubts set in and they slipped below my 60p level. Both Myhome and Prezzo have retreated further since their expulsion.

The portfolio upheaval is in response to an unpleasant and, in some respects, unprecedented stock market slump. Blue chips, as measured by the Footsie, are, despite the strength of resource stocks, well below last year's peak, but they have so far avoided the savagery that has traumatised the small-caps (again with the exception of some commodity players).

Any share that could be hit by the expected consumer belt-tightening has been an obvious target for the bears. My three casualties fall into this category. I suppose Prezzo has done quite well, losing only around half its value, compared to its much larger peer, The Restaurant Group (Frankie & Benny's and Garfunkel's), which at one time was recording a slump from 370p to not much above 100p.

But the undercard has also had to contend with other abrasive influences. The credit crunch has prompted many investors to desert what they perceive to be the more risky end of the stock market and to transfer their allegiance to areas which they hope are harbouring less speculative investments.

And the dark shadow of Chancellor Alistair Darling hovers threateningly over the small-caps. His plans to change investment tax rules are already having an impact. Come April, the junior Alternative Investment Market (and possibly Plus) will be much less attractive places for investors. Darling intends to remove taper relief on capital gains tax. So AIM shares held for more than two years will no longer be subject to a 10 per cent charge. Instead, they will be taxed at 18 per cent. Changes to inheritance tax are also calculated to inhibit AIM.

Already there is evidence of evasive action, particularly on Aim. Some investors have contributed to the retreat by selling, and others are likely to do so before the April deadline. Unless there are significant eleventh-hour modifications, Aim could be seriously wounded.

To rub salt into the wound, the Darling imposition comes as Aim's membership reaches 1,700 companies, a record.

Besides the short-term implications, there is an obvious danger that Darling's measures will reduce the effectiveness of Aim in the years ahead. The average private investor may think twice before buying into Aim companies, and ambitious entrepreneurs, as well as the important pre-float investors, may be tempted to look elsewhere. Some companies are already thinking of moving to a full listing, and once the new rules are in place ambitious fledglings could be tempted to opt for an overseas market.

There is no doubt that Aim has been an outstanding success. It has attracted constituents from around the world and made London the envy of many overseas stock markets. What a pity that a short-sighted Chancellor, in pandering to trade union demands, has (intentionally or not) acted to damage such a successful creation.

The portfolio has always been a small-cap fan. Whether the Darling dampener will force it to move up-market remains to be seen. There is still value on the Aim and Plus fronts, but life is going to be tougher for dedicated followers of micro-caps.