So you’ve inherited a wad of cash from old Auntry Mildred – you know, the one that smelt like mothballs and kept removing her falsies before giving you that www (warm wet welcome) kiss.
At least she was wealthy!
Your sister who is a part-time financial advisor, and full time know-it-all, suggest you invest your windfall with an up and coming, hot-shot female stock broker that she met in a woman’s only gym.
Typical, male chauvinist pig, you are unfairly jaundiced to the fairer sex.
You can relax. It’s now official, woman make far better investors than men!
A survey by Digital Look, a UK investment website, studied more than 100,000 portfolios over 12 months.
The average woman’s share portfolio grew by 17%, while the average man’s rose by just 11%. Over the same period, the FTSE All Share index climbed by 13%.
So that’s a 4% outperformance of the Index and clear beat by 6% of the male portfolio.
The previous year woman also beat the Index by 3% and the men by 4%.
A study carried out by the National Association of Investors Corporation (NAIC) for the University of California, found that the share portfolios of women earned on average 1.4% more per year than those of men.
Similar research from Germany’s Hypovereinsbank found that the investments of its female clients outperformed male customers by 3%.
Gambling: stupid and gullible?
One reason for the outperformance a reluctance to chase after the latest fad sector or hot stock.
“Women spend 40% more time than men researching and are less likely to trade on a hot tip.”
Most women – 64% – are investing for long-term financial security, according to a study by T D Waterhouse.
They will also collaborate with others, perhaps talking to an adviser or joining an investment club. Men, on the other hand, have greater confidence in their own opinion.
A balancing act
Women tend to avoid share ‘fads’, tending rather to back a balanced portfolio instead of more risky stocks. Building up portfolios favouring leisure, food and drink, and utility firms.
“When they do take risks, women tend to be more rational and consistent and less impulsive than men,” Kate Fox, author of the Sex in the City report.
The female tolerance gene means they stay the course. In other words, there are less likely to trying to time the market.
Whereas men traded their accounts 45% more often than women.
Not only do the rapid switches in investment strategy fail to produce better returns, they also ran up far higher transaction fees.
This holds with research from a new report by social anthropologist Kate Fox which shows that women tend to be more patient and less impulsive than men.
Terrance Odean, a University of California at Davis professor who also has studied the issue, found women earn slightly better returns because they trade less frequently. Men, he says, are overconfident!
“Everyone makes mistakes, successful investors learn from theirs.” Hannah Grove, chief marketing officer of Merrill Lynch Investment Managers.
That’s what Merrill Lynch claims to have found in a recently released survey:
13 percent of women and 24 percent of men said they had bought a hot investment without doing any research.
The men were more likely to repeat that mistake!
Merrill said its results showed 35 percent of women said they had held a losing investment too long, while among men it was 47 percent.
The worst part: Of those who did it once, 48 percent of the women and 61 percent of the men admitted to doing it again.
Some of the most common mistakes that both men and women made were:
• Putting too much money in a single investment
• Not selling losing investments
• Waiting too long to start investing
• Not saving enough
What can we draw from all this?
Whether you’re a man or a woman, it pays to acknowledge your limitations and to try to understand the emotions that may be driving your decisions. Research investments before taking the plunge – and maybe even seek out some knowledgeable advice.
And learn from those mistakes. After all, you’re paying some pricey tuition for the education..
As usual, my team is available to help to avoid paying some of these “school fees”.
Here’s to profitable trading,
CEO | Vunani Private Clients