Why Women are Better at Investing

Why Women are Better at Investing

21 February is a special day for me.

Every year, I look for something new to do. Mostly, I want to do something that scares me or pushes me outside my comfort zone.

Well this year, that day marks the anniversary of a job interview I was woefully underqualified for, 10 years ago.

I wanted the job. Bad. The interview wasn’t an ordinary one either. It was a 10 minute presentation to a room full of people, on a subject I knew pretty much nothing about.

The idea of doing this — going for what I really wanted and scaring the bejesus out of myself in the process — seemed like the perfect challenge for that date.

Once I arrived for the interview, there happened to be two men, both above six foot tall, with  intimidating presences to match. They also had the same name, and were both wearing pink check shirts that day. Neither of them looked amused when I made jokes about them ‘twinning’.

A week later, I got the call. I’d landed the job.

I’d finally done it. I officially had a job ‘in the markets’.

Where are all the women?

In Australia — more so if you live outside Sydney — landing a job that directly works inside the markets is hard work. The positions are far and few between. For every stock market job advertised, there’s 30 people throwing resumes at it. And half of those would work for less than you.

The industry is highly competitive. Which is a good thing for the employers; they can pick and choose from the best.

Once I started working for this company, I never questioned my all-male surroundings.

I mean, I’d spent five years dancing around in jobs on the peripheral of the markets. So a male dominated environment wasn’t new to me. And with my sailor’s vocabulary, I fit right in.

But lately, this gender imbalance is getting harder to ignore.

For years, friends and family have argued that I should use my position here at Money Morning to push for a female view when I write. But I’ve trotted out the same line each time. ‘Money has no gender, so why should I write to women only? After all, if they are interested in the market, they’ll find it.

And I’ve stuck with that for a long time. If women want to invest, they’ll find a way.

However, at the Great Repression conference we held in Port Douglas last year, I kept hearing the same thing over and over. ‘Where are the women? Why isn’t there a single female presenter? Women invest too, you know.

I heard this repeatedly from the female attendees. In fact, I know our publisher Kris Sayce copped a few ear bashings about it too.

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Nature or nature?

Is it time to change that? That’s where you come in. But I’ll get to more on that in a minute.

In the aftermath of the 2007/08 market crash, there was article after article about why women are better investors than men.

Gary Dayton from TradingPsychologyEdge.com said, ‘Women tend to be calmer, possess a longer-term outlook, do more research on their investments and remain steady under pressures.

Dayton then cites a study from Vanguard that looked at how men and women traded through early 2007–October 2009, saying women closed their positions at a 10% lower rate compared to men. ‘Men were more likely to trade then women during the 2008–2009 financial crisis, and they did so at the wrong times. Men were much likely to sell stock at market lows.’

A Bloomberg study in 2012 said that female-managed hedge funds beat their male counterparts by 55% over a nine year period.

If we jump forward a few years, it seems this hasn’t changed.

The annual study, Boys will be boys: gender, overconfidence, and common stock investments from the University of California in 2016, said this trend continues. The academics behind the study argue female investors beat the men by roughly 1% per year. The reason? Women have less urge to ‘fiddle’ with their investments.

Another survey from US online investment-sharing platform Openfolio found in 2015 women lost on average 2.5% that year. Men lost on average 3.8%. When you consider that the Dow Jones closed 2015 down 2.78% for 2015, female investors arguably ‘beat’ the market that year.

The take away here isn’t that women are better at picking winning stocks. It’s that they position themselves carefully to avoid the fall.

Known money is better than unknown money

Let’s be honest, for us to have any data on female investors, it means they’re out there. It’s not like we’re hunting for unicorns here.

However, what’s apparent is women are more risk averse than men.

The fact is, women like money in the bank. The Financial Times crashed a 12 member female only investing study last year. A few minutes in, it quickly became apparent that guaranteed money means far more than ‘potential profits’.

Deborah Mattinson from BritainThinks, backs this up, saying, ‘What we found in the focus group was that for these women, the certainty of outcome far outweighs any desire for profit. The weight of responsibility is high — all the women wanted to be certain that the money they had saved would still be there for its intended purpose, and could be repurposed in an emergency. This was why savings accounts…were so popular despite very low interest rates.’

It’s not a scientific survey, but my extended social group backs this view. I have a several female friends that have scrimped and saved every penny for a house. One friend saved up a six figure deposit to buy an overpriced bayside unit. Another one bought a run-down apartment in a trendy suburb at the top of the market for this particular area.

They only used saving accounts to do this.

Let me make it clear, I admired their determination and focus. But they wouldn’t hear of whacking some money in the market to amplify their gains. Bank interest and limiting their spending was the only way they planned to increase their wealth. Safely.

Now they have secured the Australian dream for themselves, the only focus is putting every cent into getting rid of that mortgage. Who needs blue chips when you’ve got bricks?

These female friends of mine walk the well-worn property path. They all have same thing in common with most women I meet. They are financially savvy, thrifty, commit to financial goals, and are incredibly risk adverse.

Dear reader, I need you…

What I want to know, is how can I change this?

Before I started writing this article, I placed a post on my Facebook page asking my female friends to tell me about their investing habits, if they had any. What stopped them from putting a couple of grand into the markets? Were they scared? Was it too male oriented? Did they not know where to start?

That post was shared 4 times. It was viewed by 1325 different people. And you know what? I got one response. One. Response. For the number minded folk out there, that’s a 0.07% response rate. Statistically irrelevant.

However, I’m not ready to give up yet.

Based on the overwhelming number of women that wanted to talk markets, money and strategy at our Great Repression conference, I know there’s women out there who want to invest.

And this is where I need you.

If you’re a woman — and I don’t care how large or small your investing experience — I want to hear from you.

Write to me. Tell me what drove you to the markets. Why you do or don’t care. Ask me every question you’ve ever wanted to ask, but didn’t because you thought you might look stupid.

Include anything you want, except personal financial information.

If you know someone who might be interested in this, forward them this email.

The fact is, women live longer. We tend to work in industries that pay less than male-dominated ones. Meaning our dollars must last longer and go further for the same financial quality of life of our men folk.

Here’s what I want to you to do. Email me at letters@moneymorning.com.au with ‘Women’ or ‘For Shae’ in the headline. Flood my inbox, ladies. I want the manager of customer service to ring me up and have a go at me for the overworked customer service team.

Let’s go find them unicorns.

Regards,

Shae Russell,
Editor, Strategic Intelligence

From the Port Phillip Publishing Library

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Shae Russell

Shae Russell

Contributor

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

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