YOU know the feeling. Within seconds of waking up you recall with a shudder that you are booked in for root-canal work at the dentist, the car needs an overhaul and the bank manager has called you in about your overdraft. To top it all, you have given up booze for January.

That is pretty much how financial commentators have woken up to 2009. Rarely has a new year received less of a welcome. We seem to be jumping from the frying pan of 2008 into the fire of a Hieronymus Bosch-inspired afterlife where the sinners are tormented by demons while being toasted over hot coals. Will it really be so bad?

The experience of 2008 for most investors was certainly a bleak one. If the earth moved for you, it was probably to swallow up your money. The value of the Heaven and Hell portfolio, including net cash from disposals, fell 26.6%. For the third year running that was better than the market as a whole — with the FTSE All-Share index down 32.5% — but that is not much comfort.

For once, the portfolio lived up to its name. The blue-chip shares that make up the “Heaven” side of the portfolio performed remarkably well. While the FTSE 250 index — the most appropriate benchmark for my Heaven stocks — fell by 39% over the year, I suffered a drop of just over 3%. There were three reasons for that outperformance.

First, I had some pretty defensive holdings in the shape of Cadbury, the chocolate to chewing gum business, and De La Rue, the banknote maker. The former makes 80% of its money outside the UK, so benefits from a weak pound. The latter barely moved over the year.

I sold the rump of my holding here just before Christmas, as I suggested last month I might if the price went back above £9. I sold for £9.25, a gain of more than 200% over four-and-a-quarter years. HMV, the entertainment retailer, also held its own over the year as competitors fell by the wayside.

Second, I benefited from taking money off the table early in the year. I sold my holding in the soaps-to-soups combine Unilever, and got a nice cash payout when the takeover of brewer Scottish & Newcastle went through in the spring. There was more cash back from De La Rue’s payout to shareholders a month ago.

Third, my switch out of insurer Standard Life and into supermarket chain J Sainsbury and pubs-to-restaurants business Mitchells & Butlers worked well. Standard Life has since fallen 20% while Sainsbury has risen 18%. M&B is little changed on my purchase price but at least it is looking like a survivor in a sector littered with walking wounded.

The “Hell” side of the portfolio — home to a mish-mash of more speculative stocks — fared less well. The value of these holdings fell by nearly 44%. The outcome would have been worse still had it not been for a couple of well-timed sales early in the year when I got out of the two oil explorers, Gold Oil and Oilex. The latter has since fallen 80%.

There were three missed opportunities here. First, I passed up the chance to sell my Genesis Petroleum shares at over 50p shortly before the company announced a dry well in the North Sea. I suspect it is now going to be a long wait before any excitement returns — though at least the company has plenty of cash. Second, I could have doubled my money in Jarvis, the rail contractor, but chose to hold on instead. Third, I clung on to my shares in Woolworths to the bitter end. And bitter it proved.

So what does 2009 hold in store? I think we could have a positive start as markets anticipate the prospect of a $700 billion (£480 billion) stimulus package from the new US president. However, that is more likely to provide a selling, than a buying, opportunity. Until the credit markets return to normal and companies and individuals alike can borrow more freely, fears of a deflation-led depression will put off any chance of a sustained recovery.

One person whose views I respect is Clive Harrison who runs Fiske & Co, the stockbroker. Harrison has spent no less than 47 years in the stock market. In a letter to clients and friends just before Christmas he warned that the market’s reaction to the present problems was still relatively modest in the context of past crises and almost certainly had further to go. “My instinct tells me that in the spring, at perhaps 1,000 points below today, we will have the turn,” he wrote.

In other words, equity investors are still too complacent. Maybe not what people wanted to hear, but it is probably a realistic assessment.

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