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:

1. Trade less than men do
   1. Will ignore market conditions and not act on a whim
2. Less overconfidence
   1. Know what they don’t know and are not afraid to question it
3. Take less risk
4. Less optimistic
   1. It pays to be pessimistic and a realists
5. Value research and consider different view points before investing
6. Peer pressure does not influence their choices
   1. Men will fall into the peer pressure for fear of rejection
7. Learn from their mistakes
8. Less testosterone
   1. 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.

My girls

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.

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Kaizen Tools Discussed

Kaizen is a well accepted business principal that seeks to improve inefficient practices in industries like manufacturing, logistics, and sales.   Toyota manufacturing is credited for developing the principal. Soon Kaizen would gain popular acceptance in self improvement fields.

The self improvement fields include:

• Health and Fitness
• Personal Finances
• Personal Relationships
• Kaizen for Productivity and Business

The Kaizen principal is about focusing on the minutiae.  The idea is that one small change makes a huge difference.  It breaks down the job or task into multiple process and then evaluates each process for waste or inefficiencies.

The eliminating of waste speeds up your process. The change is then made and will be monitored before proceeding to the next process.

2 Powerful Kaizen Tools 

Consider these two powerful tools to improve your personal finances:  force multiplier and automation.  Both achieve similar results and your risk-tolerance will depend on the tool you choose.

Read more about the Kaizen tools in this FREE Ebook

Kaizen Tools in Your Personal Finances

Automation

Automation is using software to automate and will include automatic transfers. Set up automatic investment for your retirement accounts.  Enroll in your company sponsored accounts and opt-in for the yearly 1% contribution increases.  Take advantage of your health savings accounts (HSA).  These HSA offers tax advantages throughout your life.

Another example of automation is to create an effective spending plan.  Capture all your expenses at the beginning of your pay period and monitor it as you go.

Plan to tweak your spending plan a few times before you can set it on auto pilot.  I will not be one to tell you can’t have the latte or avocado toast. I don’t believe these goodies will keep your from being wealthy.

Force Multipliers

Force multipliers can be describe as tools that help accomplish your desired goals.  If you prefer to handle cash you can use envelope system to handle your plan.  You can plan to keep cash for gasoline, groceries, fun activities, etc.

We started out with an envelope system and would later go to an automated one.  The idea was to get comfortable handling cash and understanding how our expenses would fluctuate.

Another example of a force multiplier can be a certified financial planner.  The CFP depicts a tool that will amplify your production output, i.e. gains and dividends.  Most CFP will not charge an upfront fee but rather they are paid by commission by the investment firm.

Kaizen Tools in Your Retirement Accounts

Automaton can also provide net worth building gains.  Here you think of diversification through mutual funds, company sponsored accounts, and individual retirement accounts.  Diversification will allow you to weather the ups and downs of the markets.

The method can be considered passive income as you don’t have to talk with your broker or review anything.  I don’t recommend you completely ignore your retirement accounts though.

Force multiplier is a tool that can help you achieve great wealth but comes with greater risk.  Think individual stocks here.  If you put all your earnings in a one individual stock the capital gains are impressive in a bull market.

Now when a bear market roars around the risk is great. Stocks in major oil companies, airlines, and restaurant chains have taken a huge loss and have offset previous gains.

The popularity of commission-free trading has open the door for many novice traders.  I consider myself a novice and invest an amount that will not hurt too much if my portfolio has great losses.

Wrapping it up

Kaizen tools are effective in managing your personal finances and creating wealth.  The tools discussed include automation and force multiplier and are but a couple of longer list that Kaizen offers.

Regardless of the tools used they will require you your buy-in.   You must dedicate time to achieve your desired results.

Go ahead and grab your FREE Kaizen Ebook below.

Kaizen and Personal Areas of Improvement 

The Kaizen Principal is an effective lean methodology. It eliminates waste or redundancy.  This reduction of wastes makes one more efficient and allows you to cut expenses.  Kaizen not only improves areas in manufacturing, logistics, or sales but the principal can be used in areas of personal improvement.

How does this work?

I wrote about 2 Powerful Kaizen Tools that has helped me gain financial independence at a young age.   The change happened as I broke the larger goal of financial independence into manageable tasks.  The tasks followed a sequential order giving me structure and clarity.

My financial independence tasks included:

• Proper insurances (enough coverage for mortgage, income, and college)
• Emergency fund (6 month savings )
• Eliminating debt (mortgage )
• Growing our income (side-hustles, career advancements)
• Investing (401K, 403B, IRA etc)

I do want to point out the order or flow matters when you seek financial independence.  It’s very important to follow your plan.  Show yourself some grace when the plan does not go as intended.  Can you say unexpected emergencies?

Personal area I use Kaizen

Your health matters. Alot.  We all have the desire to run every day or hit the gym as often possible.  We plan to watch what we eat.

The reality is we struggle making the time and fitting these desires within our daily obligations.  When you apply Kaizen to your health you take the larger goal and make it into smaller tasks or micro workouts.

Micro-workouts

Focus on smaller workout instead of the usual 30-60min workout.  These micro -workouts include 5min walk around the block or 20 burpees when you take a small break.  I’ve not been able to visit the gym and have been able to carry a workout regime at the house.

The workout takes 10 minutes and consists of cardio like jumping jacks, burpees, and running or walking around the park.  Another workout you may have not considered is gardening.  Consider the carrying, hauling and squatting a gardener does. Plus you soak in the sun.

Your eating habits matter too.  One program I tried was Keto diet and was pleasantly surprised with the results.  The weight came off rather quickly.  I didn’t have to spend hundreds on plans to make keto effective.  I consumed more protein and very little carbs.

The idea is to see your health as a workflow or process: healthy eating habits and workouts. Examine the flow and see what habits you can eliminate and make a new habit.

I provided just one example of many areas of where Kaizen can help you make improvements.  The reality is that you can apply Kaizen to any area you want.

Here’s How

Assign a workflow to any of your areas. If you can easily assign a workflow to any area then you can apply Kaizen to it.  Kaizen works because you can follow the process from beginning to end.  This allows you to see what areas need to change or areas that are causing delays, additional expenses, or grief.

Take Away

• Develop a workflow for an area you want to improve
• Break down the area into smaller tasks
• Take these smaller tasks and review for redundancies
• Look for ways to automate or apply force multipliers to the task
• If neither of the above is possible need to evaluate its importance
• And be prepared to eliminate completely