Derek Pain: It can pay to keep a cool head in these unpredictable times

No Pain, No Gain

Perhaps, it is not surprising that the No Pain, No Gain portfolio has endured a rocky three months. Trying to combat the witless behaviour of shares these days is something of an ordeal. The quarterly retreat is quite substantial – more than £4,000. I had hoped a few encouraging successes would mitigate the decline that has blighted the stock market. But the sheer savageness of the selling has proved too powerful. Most buy and hold investors are no doubt suffering. The old saying, sell in May and buy again after St Leger Day, has proved to be at least half right this year.

Whether day traders have survived in style is unclear. I would not be surprised if some suffered nasty reverses. But it is possible to make killings in bear markets – as has been proved many times – and astute quick in-and-out specialists (and short sellers) could be rubbing their hands with glee and hoping the atmosphere will remain nervous and gloomy.

For long-term players these stressful times are hardly conducive to happy investing. Yet it has been proved time and again that investors who refuse to panic and let the hysteria pass over them are long-term winners. It is, I believe, also a time to buy. Of course it is sometimes necessary to realise shares at depressed levels but, in the main, shareholders should hang on if they can. To quote a now rather discredited line once used to help win an election – "things can only get better".

But it must be admitted that dark clouds are likely to engulf the world's share markets for some time. The US economy seems woefully weak and the euro lurches from one pantomime debacle to another. Yet many companies, while facing challenging conditions, continue to enjoy handsome rewards. With perhaps a couple of exceptions I remain happy with portfolio constituents. Patsystems, I feel, looks the most vulnerable but I intend to stick around, at least for the time being. And NCI Vehicle Rescue has had a difficult time, suffering an £8,400 loss against a restated £123,000 profit. No dividend is being paid this time. Such a result is disappointing although, perhaps, better than expected. The shares retreated a few coppers on the results. Like Patsystems, question marks hang over its continuing portfolio membership. Two constituents were ditched in the quarter but their dismissals had nothing to do with the general stock market's retreat but related to their poor performances. We all make mistakes but I seem to compound my errors by a reluctance to sell when danger threatens.

Capital Pub Co was the quarter's hit. The portfolio nearly doubled its money following the take over by Greene King. Cheques have been despatched.

Northern Petroleum, recruited last month, has lost no time justifying its enrolment. The shares bounded ahead following the revelation that Tullow Oil had struck oil off the coast of South America. Oil and gas exploration is noted for throwing up uncomfortable surprises. But the stock market has warmed to this strike and available omens are encouraging. Northern has a mere 1.25 per cent interest in the venture but I have seen estimates that its stake could be worth up to 50p a Northern share. The company also has considerable interests in Italy and Holland as well as this country. It was the European interests that attracted the portfolio. But I am not complaining. After all every investor needs a little luck.

Whitbread is the other top performer. The shares are well down from their year's high but last week's update proved how much the stock market is besotted with economic woes. The shares jumped more than 100p as the leisure group, once a "big six" brewer, reported booming sales in its Costa Coffee operation and a sound display by the Premier Inns budget hotel side. Pub/restaurants served flat numbers but the group's overall display sent the doubters running for cover.

The departure of Capital means membership is down to "unlucky" 13. I don't like tempting fate so I will try to add to my collection as quickly as possible. One possible recruit is Animalcare but the shares look a little high for these straitened times. Figures, due soon, may shed more light on the valuation. Another possibility is H&T but the pawnbroker has proved to be a beneficiary of the recessionary environment. Still recent share weakness may mean I'm not too late to enjoy the party.

yourmoney@independent.co.uk