8 Reasons Women Make Better Traders than Men
8 Reason Women Make Better Traders than Men
Recent studies show 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 have more women in finances.
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 she found similarity in the behaviors she 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 be 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. It becomes an ego trip.
- 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.
As a father to two daughters I find research like this encouraging! I want them understand that finances in not just a man’s world but they too have access to wealth.
I am currently teaching my daughter the basics of personal finances. Along with those nuggets they are learning about entrepreneurship and learning to see a need and looks for ways to fill that need.
BTW you can grab a copy of some of the items I’m teaching my daughters.