A: A real estate agent works for the seller, a portfolio manager works for the buyer.
If you are buying a property you have no one to provide you advice on what the property is worth, agents work for the seller. It is their job to get as much for the property as possible, as such they are always talking the price up, the market up and the economy up. There is no commission for the agent to try and talk the seller down to a lower price. For real estate it is always about the seller not the buyer.
As a portfolio manager dealing in direct shares my job is to look for bargains, to look for those businesses that are trading below their intrinsic value. My job is to provide professional advice for the buyer to assist them in buying a good long term investment. To do this I need to form an opinion of what a company is worth and then wait for an opportunity to buy.
These events are very common especially in a market like we have experienced for the past 4 years. Most people assume that all investors are logical and make their decision based on careful consideration. In fact this is far from the truth; even the large players have a herd mentality and will sell a quality company because everyone else is. Keep in mind that the large players are not using their money they are playing with your superannuation.
I, on the other hand invest directly into all of the companies which I recommend for clients as such I carry the same risk as my clients. I only look to buy companies which are fundamentally cheap and pay a high dividend yield out of free cash flow. I have strict criteria when researching a company, I do not concern myself about what the herd is doing and only worry about the performance of the company.
Unlike the real estate business I look to see what the market is doing at any time and then focus on the opportunities this will bring. If the market is moving up I will look to the growth stocks in the materials sectors if down the value stocks.
I work for the buyer; you make your profit from buying at the right time not from the sale.
At present the market is low and there are plenty of opportunities.
I have completed my model portfolio for the 2012 year and will be sending recommendation out to clients in the coming week. The model will be posted on the web site but only after clients are set.