8 Reasons why women make better traders than men
8 Reasons Women Make Better Traders than Men
Recent studies have shown that female investors gain more consistent returns with consistent performance
If you’re a man reading this chances are the title either disturbed you or you are rolling on the floor laughing out loud. Not what you thought about investing did you?
Why is that?
If you’re a female you might have had a hunch that you’re better than your husband but couldn’t prove it. Until now that is. Please don’t gloat about this.
Ok, maybe gloat for a minute or so.
Makes me wonder why we don’t see more women in finance?
In a book authored by Louann Lofton, Warren Buffett Invests Like a Girl and Why You Should Too, she brings forth research indicating that women have enjoyed more consistent returns with consistent performance.
The author looked over Mr. Buffett’s investment strategy and he too demonstrated all behaviors listed.
Consistency is what you want.
Why should you take her word?
You’re right you shouldn’t but consider that the research she presents was conducted by several teams and all concluded that women are better investors. Better investors in the sense that they are consistent.
Eight reasons women performed better include:
- Trade less than men do
- Will ignore market conditions and not act on a whim
- Less overconfidence
- Know what they don’t know and are not afraid to question it
- Take less risk
- Less optimistic
- It pays to be pessimistic and a realists
- Value research and consider different view points before investing
- Peer pressure does not influence their choices
- Men will fall into the peer pressure for fear of rejection
- Learn from their mistakes
- Less testosterone
- Are naturally inclined to take less risk
Women in the studies did not necessarily pick better stocks but they had the fortitude not to trade or sell when the market was tanking.
The men took the money and ran. The goal to any investment is to ignore the noise and hang on to the stocks for the long term. The author suggests that investments need be long term and Warren Buffett is of the same logic too.
Let’s be honest with ourselves. It’s ok to say we don’t know. The study highlighted women’s honesty in admitting they knew what they don’t know.
As an example, the author mentions Mr. Buffett’s tendency to avoid technology companies. These are outside his comfort zone and he avoids them. He wants to understand the business before acting on.
Research like this encourages me as I have two daughters. I make a very conscious effort to teach them the basics to finances. Along with the basics I allow them to pick stocks based on their daily consumption, encourage entrepreneurship, and am developing their minds to see needs and opportunities.
Let me give you a free gift on what I’m teaching my daughters at the moment.
For women I want to encourage you to stay the course. You will outlive your spouses and the sooner you realize that you can win in a man’s trading world the longer your nest egg will last.
For men the words of advice I want to impart on you is to hone in on the traits the author identified and your portfolio will thank you.