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John Phelps's portfolio review 2013

We were in celebratory mood again over Christmas as the performance of our share tips trounced the benchmark Financial Times Stock Exchange 100 share index for the 11th year in succession.

The total value of our four investment portfolios was up 25% at our annual review of progress last week. The Footsie boasted an 11% increase in the same period.

Easily the best performance was by the portfolio of six shares we launched early in January. It recorded an overall increase of 48.1% in less than a year, including proceeds from dividends.

But we were equally delighted to liquidate our 2010 portfolio on Christmas Eve with a double-your-money gain of 101.8% in four years.

We invest a notional £1000 in each of six shares every January and manage the portfolio on a weekly basis with the idea of winding it up after four years with a total gain of £6000 on the original investment.

We have missed the target only three times since we started in 2003, falling tantalisingly short in 2012 when our 2009 portfolio gained 98.6%.

Admittedly, followers would ­struggle to achieve the same returns as we use the normal newspaper tipster practice of using the same "middle" price quoted by dealers for both buying and selling shares.

This spread between buying and selling a share is usually a fraction of a penny with larger companies but can be a good deal more when trading in more speculative selections.

Like others, we also ignore broker fees and stamp duty.

We try to minimise these trading costs but always stick rigidly to our stop/loss system where we set a figure at which we advise followers to sell shares which have fallen 10% below previous peaks.

The system paid its way last year when we ditched three shares in our 2013 book and reinvested.

We ejected Scottish cloud computing specialist Iomart for a 40% profit and saw double-digit gains in Diageo and satellite communications group Avanti, all now trading below our selling prices.

Some proceeds were wasted on a disappointing spend on Barclays and we are still losing on a fresh investment in the Signet jewellery chain. But we have seen a 77% rise in Royal Mail shares and a healthy rise in Scottish retinal imaging group, Optos.

The 2013 portfolio gained from our early decision to back prospects of a housing revival with nominal purchases of shares in builder Galliford Try (up more that 55%) and residential landlord Grainger (up 70%).

Similarly, the other portfolios were flattered by the inclusion of top performers such as safety equipment group Halma, catering giant Compass and revitalised insurance group, Legal & General.

But we were not sentimental about success and only last week ejected Scots packaging group British ­Polythene Industries from our 2011 portfolio under the stop/loss system. It had flagged after a near-60% rise.

Similarly, we were able to use the same system to book healthy profits in supposedly safe shares such as SSE and Scottish Gas group Centrica soon after investment sentiment turned sour in the autumn as politicians capitalised on consumer concerns.

Much of our success, though, was the fact that we avoided major pitfalls in 2013 by steering well clear of volatile areas such as mining and banking, and limiting fresh investment in companies which rely on sales to emerging markets and the UK's own beleaguered high streets.

We are prepared for changing conditions in 2014 and have collated a fresh portfolio of six shares for launch next week in a bid to beat the stock for the 12th successive year.

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