Applause for our top-earning share picks

According to the well-worn cliché, a week is a long time in politics. Apply that nostrum to the markets and you might want to replace "long time" with "lifetime".

When we selected our 10 stocks to follow at the start of the year most of the experts were predicting solid, but unspectacular, gains for the stock market in 2011. The British economy was expected to grow, albeit slowly, and while there were still plenty of uncertainties, at least fears of the dreaded "double-dip" recession had eased.

Nonetheless, having taken some big risks in 2010 in putting together a "special situations" 10 to follow that ended up comfortably beating the markets, we opted for caution and selected what we felt was a conservative portfolio, one that we hoped would be insulated from major shocks should things go awry.

Things have certainly gone awry. The markets have suffered a succession of shocks and the outlook is now much more gloomy than it was at the beginning of the year.

While the leaders of the eurozone dither, confidence just keeps on draining away. Now it seems that barely a week goes by without a major upheaval in the bond markets as investors have taken a hard look at the bigger economies on Europe's fringes and opted to head for the exits. Then there's the biggest economy of all. With the execrable Tea Party movement holding not just America's economy but that of the whole world to ransom, and using the US deficit as a tool in low politics, is it any wonder that the Stars and Stripes has lost its cherished AAA rating? With fears of a slowdown in China, could it get much worse?

Against this background it is a wonder that the FTSE 100 index has not lost more than the 13.05 per cent it had given up since 1 January at yesterday's close. Investing £10,000 in tracking the index at the start of the year would have left you with £8,695 by the close of play yesterday.

So how has our conservative portfolio performed by comparison? Well had you invested £10,000 in it, you would still have made a loss. But at the close of play on Friday that £10,000 had turned into £9,365.10. But while our portfolio is down, it's definitely not out and it is ahead of the FTSE 100.

All the same, just three of our 10 are in the black and, surprisingly, two of those are in retail – a sector many felt would suffer with high inflation and falling incomes forcing a consumer squeeze.

But while his tenure as the owner of Newcastle United might have Geordies gnashing their teeth, Mike Ashley's Sports Direct juggernaut continues to roll on. It shouldn't really surprise us that a discounter is doing well in the current climate.

Then there was the decision by the competition authorities to drop a pricing probe, and Sports Direct's purchase of 32 properties from Mr Ashley, a move that cleared up potential conflicts of interest and was seen as earnings enhancing. Perhaps, then, it's no wonder the shares, which started the year at 160p have been stellar performers and yesterday closed at 206.1p.

The other retail star for us has been Britain's fourth-biggest supermarket chain, Morrison's. Marc Bolland may have gone to M&S, but Dalton Philips has attempted to turbo-charge Morrison's growth since arriving from Canada. He's been outbidding rivals to secure new stores, especially in the South of England, and has taken a 10 per cent stake in Fresh Direct, the New York-based online grocer, for £32m to gain some expertise ahead of launching Morrison's internet service in the South-east in 2013. The first convenience stores under the M Local banner have also opened along the M62 corridor, and it seems that the group is well placed to continue closing the gap with Asda, Sainsbury and Tesco. Then there's the possibility of a bid for Iceland. So three cheers for Mr Philips, whose shares kicked off 2011 at 268p, but closed yesterday at 280.2p.

Our other winner so far has been the star of Silicon – or should that be Fen? This is the Cambridge-based chip designer, Arm Holdings, whose products sit in your iPhones and a myriad of other gadgets.

Despite the shares enjoying a lofty racing, at least based on earnings multiples, they have simply gone from strength to strength. While it's hard to see them soaring from their current level, this is a company that has had a habit of defying expectations. Starting the year at 423p, the shares yesterday closed at 533p.

On to the losing shares, which regrettably make up the majority of our portfolio at the moment. We opted for a slew of resource stocks, on the assumption that thanks to a recovering world economy and China's ever-growing demand, they would be a sure thing.

Not so. For a start the sector's earnings are in dollars, so currency movements inevitably have an impact on the sterling denominated share prices. But the recent market turmoil has badly knocked sentiment towards the sector. Resource prices are driven by China, and with its high inflation, and signs that monetary policy is being tightened there are real fears that the breakneck pace of its growth may start to slow.

It's not just economic policy, however. China's economy is driven by exports and while domestic demand has been growing, that may not be enough to protect it from Europe and the US experiencing a debt-driven double dip.

The sector's heavyweights have also been hit by the rising cost of the materials and equipment they need to get the stuff out of the ground, combined with rising labour costs.

BHP Billiton issued a warning about these factors with its results earlier this week, results that missed the City's forecasts. The final issue affecting the sector is the possibility that the governments of resource economies such as Australia and South Africa seek to grab a greater share of the revenue from what lies beneath their soil by increasing taxes. Australia's Parliament is soon to begin debating just such a measure.

Hardly a surprise then that BHP, which started the year at 2551p, now stands at 1,959p. Rio Tinto has also fallen, from 4487p to 3,523p.

The gold price may be glittering, but African Barrick Gold has eased back from 611p to 544p. It has had operational issues and is not immune from the difficulties outlined above. We backed BP as a recovery play, and still believe that it is undervalued. But those economic fears have hit the oil price as has the belief that supplies may improve from Libya once a new Government is in place. BP began at 466p but yesterday finished at 386.3p.

With an activist investor in effect seizing control, we had high hopes for F&C Asset Management, but fund managers have a habit of falling sharply when the market falls. That is why its shares, which started the year at 84p, now stand at 67.7p.

On to Domino Printing, whose business is labelling food packages. The company produces machines that put the "variable data" – things like sell-by dates that can't be printed with the rest of the label – on to packets and tins, and then offers ongoing services to those clients.

We felt it should prove defensive after it put out a good set of numbers at the end of last year. Despite the support of some high-profile fund managers, it hasn't proved to be as defensive a stock as we had initially hoped it would be.

Nor has Smith & Nephew, which makes replacement hips and knees. Its most recent results earlier this month looked good but it has still lost ground having begun the year at 676.6p. It is now at 574p. Perhaps a revival of the takeover chatter that buzzed about this stock at the end of last year could pep things up?