Women are supposed to be very conservative and very thrifty. That’s the model from our mother’s generation. Accounted for every penny every week and bought only those things that were on sale.
How is it then that we are better (performance-wise) in our investment picks than our male counterparts?
Well, for one, we don’t trade that much. We buy something and hold it for a l-o-n-g time. That allows for dividends to be reinvested, capital gains to be declared, and in general, a buy-and-hold strategy by default. So, we don’t rock the boat that often.
Secondly, we tend to read and research before we invest. It’s not what they are talking about in the locker room or at the local watering hole. As Peter Lynch, the master of the highly-successful Fidelity Magellan Fund, said in an interview, “I watch what my wife buys and look to see what company makes it.” In essence, he is following trends in the retail market. We do the same. We know what brand of refrigerator, what stove, what dishwasher we use and look to see what the competitors are offering. If the competitor’s appliance is a better deal, we might consider that company over another one.
We also join Investment Clubs. Not much negative to say about the performance of those clubs (as in the Beardstown Ladies Investment Club)! They require collaboration in the buying and selling decisions of the group. Collaborative thinking in investing is not that common in men. Competition to pick a winner is very much in the arena of men. Bragging rights are good!
In short, we are not easily impressed by the noise and the flash of companies that advertise the most, or offer the sweetest deals to buy. We do look at the fundamentals. And if they make sense, like a good bargain, we act.
Always exceptions to this, but in surveys of those who invest in their 401k plans, women investors have come out ahead.
Except they are not in the workforce long enough to beat men at the finish line, retirement. Still work to be done, but we are on the right track.