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Washington Post on Behavioral differences in investing across genders

Found this article by Robert Carden interesting, forwarded to me by LeeLoo.

Terry Odean, a University of California professor, has studied stock picking by gender for more than two decades. A seven-year study found single female investors outperformed single men by 2.3 percent, female investment groups outperformed male counterparts by 4.6 percent and women overall outperformed by 1.4 percent. Why? The short answer is overconfidence. Men trade more, and the more you trade, typically the more you lose — not to mention running up transaction costs.

The article goes on to explain other reasons why men aren't as good at investing, attributing some of it to higher levels of testosterone's effects on decision making, and some of it to men's culture of one upsmanship and competition. I thought this quote was kind of distinct:

“Women are more loss averse than men, more emotionally unattached and are far quicker to unload losers. Whereas men with their bravado, they don’t want to admit they’re wrong,” says Anthony Zalesky, a certified financial planner who advises individual investors and small businesses.


and also this one:

“When it comes to trading, men are more hormonal than women,” [John Coates, a neuroscientist at Cambridge] says.

What was that stereotype about women being more overly emotional than men?

The advice at the end is quite clever. From LouAnn Lofton, author of “Warren Buffet Invests Like a Girl: And Why You Should, Too.”:

Lofton’s remedies are more challenging to certain men, because they involve listening. And not the kind of “yes, dear” head nodding while watching SportsCenter’s top 10 plays.

“If the man is lucky enough to have a wife or girlfriend, bring them into the discussion, share the decision making with them. Women will tamp down some of the crazier risk,” she says. Legendary Fidelity fund manager “Peter Lynch involved his wife and daughters in a lot of decision making, and he did pretty well,” she says.


So level headed women make more sound choices on what to purchase up front, don't make as many transactions on a whim, and don't trade on emotion or competitive instinct, so they do better overall. If you want to trade like that, involve them in your investing decisions and listen to them, and you'll gain the benefits of their perspective.

The article does play a little Men are from Xanthon 8, Women are from Xanthon 9 at times, but otherwise seems to make its points based on reasonable evidence. Curious what you all think about it though.


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