Derek Pain: 'AIM may be the market's wild child - but at 20 it's a survivor'

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AIM seems to be attracting increasing criticism after reaching its 20th anniversary this year. I thought such an occasion would generate benign celebratory applause but such mild reactions have been few and far between.

Instead, AIM is frequently seen as little more than a casino, and questions are being asked about the regulators of the "wild west" of the stock market.

True, during its 20 years AIM has produced scandals. I believe that the very nature of the Stock Exchange's junior market makes the occasional dubious event unavoidable. Consequently, all investors should tread carefully. But then caution should apply to all investments, including so-called blue chips, where disasters have been known to occur.

The Stock Exchange sums up its thoughts on AIM (originally called the Alternative Investment Market) by saying it is "powering the companies of tomorrow". It is therefore a play on the little'uns, which are often relatively untested operations with ideas that may, or may not, come off.

Since its launch AIM has attracted 3,600 companies. Some have gone belly-up. In other cases, lines of communication have been inadequate. And there are a few examples where fraud has possibly reared its ugly head. Perhaps, sometimes, AIM's rulers have been slow to act – but it should not be overlooked that it has enjoyed many successes.

The junior market is also a survivor. Some overseas imitators failed to last and it can now claim to be the world's most successful growth market. Its creation followed two failed attempts to establish junior markets, namely the USM and Third Market.

Of course investors should examine any AIM investment diligently – the No Pain, No Gain portfolio has suffered a few disasters. But it has also enjoyed rewards. Don't forget that the portfolio's star performer, the Booker cash-and-carry chain, was at one time an AIM stock. Now at its peak – at 180p and capitalised at £3.2bn – it is a constituent of the FTSE 250 index, which is just below the blue-blooded FTSE 100.

Mears, the support services group that is fully listed, has been ditched from the portfolio. I sold at 396p.

It was with reluctance that I dumped the former AIM stock. The group has served the portfolio well, and I intend to continue to follow the shares. Who knows? Perhaps they will be recruited for a third time.

The first round produced a handsome profit. The shares were again enlisted at 272p. It is to preserve some profits that I have unloaded.

Life has suddenly become tougher for the group, with contract opportunities becoming more "subdued". Last month I contemplated a sale. Since then the shares have continued to retreat.

There are worries about the impact of government cost-cutting on its social housing and home care operations, and its latest domiciliary care acquisition presents at least short-term problems.

Of course the stock market has not oozed confidence lately, but Mears seems to have been hit particularly hard. I have supported shares when they've run into trouble but I have decided to display a more ruthless approach. Mears' departure means the portfolio has encountered the dreaded "unlucky 13". The way Stock Spirits is performing, with a 180p cut-off price, it will soon be down to 12.

yourmoney@independent.co.uk