BY KATHERINEREYNOLDS LEWISFOR USA TODAY
GIVEN HOW THE WORLDOF HIGH FINANCE ISDOMINATED BY MEN,
you’d be forgiven forthinking that theymake better investorsthan women. Butthe fact is piles of research show that it’smen’s better halves who produce betterreturns.Female hedge fund managersachieve higher returns than their malecounterparts, according to industrytracker Hedge Fund Research. During the2008 financial collapse, men were morelikely to abandon equities, missing outon the stock market’s rally since then,according to Vanguard. And University of California researchers studying 35,000households over six years found thatmen traded 45 percent more frequentlythan women, reducing their net returns.So it might be time to buck up andfigure out what women are doing right.
ASK FOR DIRECTIONS
Financial advisers find women muchmore likely to seek help in makingdecisions, to ask questions when theydon’t initially understand something, andto dig up information.“We know women ask for directions,and when they’re given directions theytake them,” says Eleanor Blayney, aconsumer advocate for the CertifiedFinancial Planner Board of Standards.“These are lessons for men, that perhapsdo-it-yourself investing is not the way togo, particularly in volatile markets whenthere’s a lot of emotion coming in. It’slike do-it-yourself surgery. Your hand isgoing to shake a bit.”Men are more likely to think theyknow more about investing than theyreally do, and this overconfidence leadsthem to costly errors. “It has been my jobto temper the overconfidence of men aswell as the under-confidence of women,”Blayney says.
AIM FOR SINGLES AND DOUBLES
Men raised in the competitive worldof sports and locker rooms often makethe mistake of thinking that investing isall about winning, says LouAnn Lofton,author of
Warren Buffett Invests Likea Girl
. Instead of taking big risks in anattempt to hit a home run, focus more onthe safe base hits that will steadily build ahefty retirement portfolio.“Get away from viewing investing asa game or gamble, and make sure youunderstand what you’re buying,” Lofton says. Just look at Warren Buffett, possiblythe greatest investor alive. He’s not inter-ested in taking outsize risks or one-uppingthe traders on Wall Street. “He is prudent,calm, and thoughtful,” she says, pointingto Buffett’s double-digit rates of return asevidence of the success of this strategy.“What men can learn from women isthat home-run hitters are also strike-outartists,” notes Mackey McNeill, a certifiedpublic accountant in Covington, Ky. “Mendon’t meet their goals because they’retoo busy trying to hit home runs, ratherthan singles and doubles.”
BE SLOW ON THE DRAW
Men like to take action. But forindividual investors, slow and steady winsthe race. Buffett is famous for a sayingthat his favorite time period to hold aninvestment is “forever,” Lofton notes.When you trade often, you run uptransaction costs and can incur highercapital gains taxes. Moreover, you riskletting emotion take over, whether it’sexcitement at the prospect of a once-in-a-lifetime stock tip or the fear of aplunging market.“Don’t focus so much on how youcan make the most money,” says Frank C.Boucher, a certified financial planner inReston, Va. Instead, stick to your long-term investing plan and be very skepticalof impulses to depart from that roadmap.The Vanguard study of the 2008 crisisis a case in point. “Men more than womentended to panic and sell at the absoluteworst time,” Lofton says. “By doing thatthey locked in huge losses and blockedthemselves from participating in any gainswhen the market turned around.”
THE SECRETTO BETTERRETURNS
I S T O C K P H O T O . C O M