A guy was running the firm. A guy was in charge at Merrill, as well as at Bear Stearns and Lehman Brothers. Goldman? Yep, it’s a guy.
Sachs was another male name on the list. Schwab is a man, as was E.F. There were many alpha males in Gordon Gekko’s line of work, and Jordan Belfort, known as the Wolf of Wall Street?
Our famous investors are, to put it mildly, extremely male. But that’s a mistake because it turns out that women are often superior investors.
In the movie The Big Short, the women saw the housing market crash coming. And while it’s not an apples-to-oranges comparison, it’s worth noting that when it comes to picking stocks, women outperform men by about a percentage point, according to a study by Oppenheimer Funds.
While we try to mansplain why women are superior investors to men, let’s all take a seat and get ready to be convinced that ladies are the superior race!
The Backstory – The World Playing a Part:
It’s not just that women are innately better investors; it has a lot to do with the fact that they often have different qualifications than men when it comes to investing.
It is true that women in accounting and finance jobs have increased over the past few decades, but men in those roles still outnumber them.
It is significant because women have often had to fight harder to get where they are. They have had to be better educated and more qualified than their male counterparts just to be taken seriously in the business world.
It is something that has translated into their investing habits as well.
Less Need to Prove Themselves:
A popular notion, but male investors frequently have to show something. It’s the ego that stands in the way of financial success.
Many male portfolio managers claim they’re “right and the market is wrong,” which has significantly damaged their portfolios and their professional futures.
Managers who think like this tend to double down when a stock takes a beating, potentially amplifying the damage when things don’t go as planned. Hint: always question your convictions.
On the other hand, ladies are less likely to put their egos on the line and more apt to admit when they’re wrong. It allows them to exit losing positions quickly, which is crucial in investing.
So there you have it, ladies. The next time your male counterpart brags about his investment prowess, smile and nod knowingly. Chances are, you’re doing better than he is. And if you’re not, at least you’re having more fun.
Stronger Research Skills:
Stereotyping is rife, but many men purchase equities the same way they buy food or apparel: they grab the first thing that appears to satisfy their needs. Of course, not knowing what you’re buying is a surefire way to fail, and women (on average) are superior researchers.
Women take a more holistic approach to their finances, looking at the big picture instead of just individual stocks. It leads to them making smarter long-term investment decisions.
Men are more likely to gamble on a highly speculative stock, while studies have shown that women do more research before investing.
Not all of them work as financial analysts, but they read more, study a firm as much as possible, and understand the dangers of investing. Men don’t.
A recent study by Fidelity Investments showed that women outperformed men by 0.94% annually between 2010 and 2015. It doesn’t seem like much initially, but over time, it adds up.
High Patience Levels:
Women are less impulsive in financial decision-making, so they’re more successful at investing. Part of this has to do with the stereotype that women are bad drivers – as in, they take their time and plan things out before taking any action.
The same goes for investing: women often have a longer-term outlook on making money-related decisions. They’re not as swayed by short-term gains or losses and aren’t as likely to make rash choices based on emotion (like men sometimes do).
It translates into better investment returns in the long run, simply because women aren’t as tempted to take unnecessary risks with their money.
Risk Aversion and Self Control:
Men, well, they’re known for being a bit more impulsive than women. Studies have shown that men are more likely to take risks, even when those risks are unnecessary and unlikely to pay off.
This tendency towards risk-taking can lead to some pretty terrible investment decisions – especially when it’s done without any planning or research.
Women are more risk-averse than men. They’re not as quick to jump into something new without first doing their due diligence and ensuring it’s a solid investment.
This self-control and aversion to risk often lead to better investment choices in the long run (again, because women aren’t as tempted to make rash decisions).
Of course, there are exceptions to every rule. But on the whole, these gender-based investing tendencies hold. So if you’re looking for someone to manage your money, you might want to give the ladies a chance, and they might surprise you!
In all seriousness, though, we should all be thankful that women are becoming more involved in investing. We need more diversity in the industry, which can only come from more women taking charge of their financial futures.
Why Women Should Consider a Career in Financing:
Investments and savings aren’t just about numbers – they’re about people. We know how to communicate, build relationships, and empathize with others. And who understands people better than women?
These skills are essential in finance, where success is about understanding your client’s needs and goals. Here are a few more reasons why women must get involved in the world of finance:
- Financial Stability:
Women’s financial independence and equality are critical first steps in achieving a sense of economic empowerment. Women should recognize that handling one’s own and the family’s finances is not difficult.
It can be successfully mastered with perseverance, effort, and an open mind. Women shouldn’t be scared to hold on for dear life during tough times and should be fearless when making money.
- Accomplish Financial Goals:
Investing is unquestionably one of the most effective methods for a woman to achieve her financial objectives, including anything from paying for your kids’ schooling/college to a holiday to increasing your overall wealth.
Women often shy away from the stock market, viewing it as too complicated and risky. However, with careful research and planning, women can make money while enjoying high safety when investing.
The Bottom Line:
So there you have it; women are better investors than men. It doesn’t mean that every woman is a great investor and every man is a bad one, but the numbers don’t lie.
If you’re looking to make smart investment choices, it might be time to start listening to your female friends and family members! After all, they could very well be the key to your financial success.
So ladies, go forth and conquer Wall Street! It’s time for us to take our rightful place at the investing world’s top.