ALL good things come to an end. So it was in 2007. The start was exuberant – a frenzy of mergers and acquisitions fuelled by cheap debt. Earnings and economies were strong.

Then the sub-prime crisis ended the credit binge, sending shock waves through global markets. In short, 2007 was a year of volatile markets. Expect more of the same in 2008.

Unfortunately, one of the many casualties of last year was the share-tipping record of the Sunday Times business team.

After beating the FTSE 100 with our tips for three years in a row – including a stellar 41% rise in 2005 – we came a cropper: our portfolio fell an average of 15.1% against a 3.8% rise in the FTSE 100.

It all looked very different in the months before the start of the credit crunch in August. The private-equity group 3i rose a decent 20% in the first five months of the year. Lonmin, the mining group, had soared 46% by July, fuelled by the voracious demand for raw materials from the likes of China and India.

As investors across the globe know all too well, the world is very different now. The common excuse is that nobody could have predicted the scale of the credit problems and the knock-on effects that threaten to push America into recession.

Another defence is that the financial crisis has led to a pretty indiscriminate sell-off. Solid companies have seen their shares battered and some sectors, such as mortgage banks, look incredibly cheap.

However, the grenades keep going off – through more multi-billion-dollar write-downs – stoking the climate of fear.

Some of our tips attempted to ride trends that grew stronger in the first half. A number of stocks, Qinetiq and Lonmin, were possible takeover targets.

None succumbed, though, despite multiple rumours.

Like many investors we were exposed for not holding classic defensive stocks – food producers, tobacco and utilities – which made recent gains.

Jenny Davey was this year’s best performer, choosing Lonmin. Although its share price rose 86% in 2006, Davey chose the company on the back of the strong run in commodity prices and as a possible bid target for rival Xstrata.

Resource companies have been hit recently by profit-taking and fears about a global economic slowdown. However, consolidation in the sector is likely to go into overdrive. BHP Billiton’s attempted takeover of rival Rio Tinto is likely to prompt further deals, with Lonmin a prime target.

Dominic O’Connell followed up his 62.8% profit from tipping Easyjet in 2005 with a far more modest return of just under 1.7% on Qinetiq. O’Connell argued that the former defence-research agency, stuffed full of know-how and long-term contracts with the Ministry of Defence, should be an obvious acquisition for a defence group or large technology company.

He was wrong, at least on the timing, and the shares did little all year, although this was something of a virtue in such uncertain markets.

Also in the black was Louise Armitstead, who tipped 3i, arguing that it would be at the forefront of the private-equity boom. That argument worked well in the first half, but the shares plummeted as the credit crunch tightened its grip. In recent weeks, the stock has started to rise again as a few deals have been done, suggesting the thaw is starting.

It has been a turbulent 12 months at Yahoo, the choice of our former colleague Paul Durman. Yahoo has been struggling to make a dent in Google’s huge lead in search engines and grappling with the success of social-networking sites such as Facebook. Jerry Yang, co-founder, took over as chief executive in June and has been trying to refocus the group. After slumping more than 40% in 2006, the shares were down only 5.5% last year, helped by better-than-expected third-quarter figures.

John Waples, business editor, argued that the aircraft-maintenance business BBA Aviation had become the type of focused operation that would be attractive to fund managers. The fundamentals still look good and the booming demand for private jets is boosting BBA’s servicing business.

However, it was hurt by its exposure to the dollar. BBA is worth holding and will get snapped up, but unfortunately that did not happen last year and the shares slipped 24.4%.

Ben Laurance’s choice, StatPro, which supplies software to asset managers, had a slight wobble in the spring as a result of downgrades on the back of the weakness of the US and Canadian dollars.

And small-cap stocks as a whole have had a terrible 2007. StatPro is reckoned to have made about £4.6m in 2007, giving earnings per share of 7p; earnings for 2008 should be 8.3p. Hardly a demanding rating – but little consolation for those who invested in the stock 12 months ago and are sitting on a 17.7% loss..

A year ago, Royal Bank of Scotland, tipped by Grant Ringshaw, was insisting that organic growth would drive profits. That all changed when Barclays launched an audacious bid to buy ABN Amro and an RBS-led consortium gatecrashed the deal and won the bid battle.

Holding bank shares has been perilous in the credit turmoil, but RBS’s ABN deal has made investors even more nervous. To be fair, RBS’s exposure to sub-prime-related losses has been less than feared and its management has a track record of turning round struggling banks. What looked like a solid bet became a dangerous punt and the shares are down a painful 33.1%.

Another case of early promise ending in disappointment was Matthew Goodman’s choice, Luminar. The shares, tipped at 732p, comfortably broke the 800p barrier. But in the second half of 2007 they went into freefall to end the year at 427½p.

It is hard to pinpoint a specific reason – there were no profit warnings or nasty surprises, though analysts downgraded profit forecasts slightly (about 4%) for technical reasons a couple of months ago. Trading news has been very positive and the group has returned more than £40m to investors through share buybacks.

Luminar seems to have been hit hard by the market’s general aversion to leisure stocks in the past few months as fears over consumer spending kicked in.

But fear was a big factor in a year that many investors, including the Business team, may want to forget.

HOW OUR SHARE TIPS FOR 2007 FARED

Reporter Company Tip price, p Price now, p Change

Jenny Davey Lonmin 3,010 3,061 1.7%

Dominic O’Connell Qinetiq 193 196.25 1.7%

Louise Armitstead 3i 1,009 1,012 0.3%

Paul Durman Yahoo $25.36 $23.45 -7.5%

Ben Laurance Statpro 104 85.50 -17.7% 274 207 -24.4%

Grant Ringshaw Royal Bank of Scotland *664 444 -33.1%

Matthew Goodman Luminar 732 427.50 -41.6%

Average change -15.1% FTSE 100 6,240.95 6,476.90 3.8%

* RBS equivalent price taking into account a share split

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