The epic battle of men vs. women rages on. This time, we're tackling a specific realm within this never-ending duel:
Which gender is the best investor?
Chances are, you've probably heard of the bestselling book Men are From Mars, Women are From Venus by American John Gray. It analyzes the fundamental differences between males and females. Dan Abrams also has a few books to his credit, like Man Down: Proof Beyond a Reasonable Doubt That Women Are Better Cops, Drivers, Gamblers, Spies, World Leaders, Beer Tasters, Hedge Fund Managers, and Just About Everything Else, which highlights the fundamental differences between the investment decisions of each gender, with a pretty obvious slant.
Today, we'll offer insight from both ends of the spectrum and allow you to decide for yourself: Who are the better investors? The men or the women?
Men (Mike Tirone): We all knows that when it comes to being a good investor, you can't be scared. Man's natural tendency is to be strong and confident with his decision making. There is no room for second guesses and questioning one's gut instincts. In terms of investing, nothing is more vital than to be confident, even if an investment goes sour. Studies show that men have greater control of their finances and place more emphasis on studying the market's trends and news.
Clearly, when it comes to great investors, men lead the way. Among the likes of Warren Buffet, Peter Lynch, and John Paulson, there seems to be no women. When it comes to the investment world, it's clearly a man's game.
Women (Brittany Stepniak): While some of his points may be valid, it is not always a bad thing to leave a smidge of confidence – or shall we call it arrogance – at the door for a bit. Confidence is dangerously close to cockiness which is never an enviable quality, especially in the realm of finance.
Wise female investors know this and aren't too prideful to accept that they aren't all-knowing. Instead, they feel no shame in seeking professional advice from experienced financial advisers. Men feel their pride is attacked when they have to ask for a map much less ask a stranger for advice on how to secure their savings.
For this reason, women have an upper-hand. Nothing gives investors more confidence than knowing they've got the opinion of an educated financial expert on their side!
Besides, cautious behavior is sometimes more beneficial than confident behavior when making crucial decisions about one's life savings. Thus, women swing towards less volatile markets like money market funds and bonds in order to reap those more certain rewards.
Sometimes it pays off (literally!) to have a more emotional response to various situations, especially when this kind of risk is involved. Investing is one perfect example of why being the more emotional gender can have advantageous qualities rather than being a detrimental road-block to success. According to The Economic Times, this is why “women investors almost always outperform their male counterparts.”
Women want to make sure they are in control of their wealth and will go the extra mile to ensure that any given situation contains as few uncertainties as possible. The innate desire for security and control over their futures is a very strong advantage for female investors.
So yes, women may manage their money a bit differently than men due to the way they are wired but their self-control – their ability to resist the pressure to act with haste or overreact and sell like crazy during market dips – ultimately allows them to obtain more concise, complete information before making critical investment decisions.
Doesn't sound like this game is exclusive to men after-all...
Men (Mike): Well -- shockingly -- the female counter-argument took far too long. Long enough for me to stop listening. Anyway, let me point out a few key issues I have with the idea that women are more investment-savvy than men.
First, let's talk history. The New York Stock Exchange was founded by the Buttonwood Agreement by 24 stockbrokers (all men) back in 1817 and elected Anthony Stockholm as the Exchange's first president. Since then, it has been a male-specific place of business. For example, an article written in 1893 in the New York Times titled, “Women as Stock Brokers: Only a Few Pioneers at Present” explains how women could not handle the stock exchange floor.
“Women are not allowed on the floor of the Stock Exchange, so that they do not buy and sell in person... The fact that [women] would even go on the Exchange floor, if possible, is illustrated by the attempt made by one of the most successful of the women brokers to do this very thing. Her effort met with prompt and decided discouragement at the hands of the Exchange authorities, however, and no woman has since repeated it.”
Women, to this day, have limited roles within the NYSE. It took more than a century for the Stock Market Girls of 1943 to work on the trading floor of the NYSE but only because of World War II disrupting the male community with wartime responsibilities.
It wasn't until 1967 that a female had their own seat on the NYSE. Muriel “Mickie” Siebert gained that title as the founder and president of the NYSE brokerage firm that bears her name, Muriel Siebert & Co. She may have broken barriers, but she still needed a man's nickname to hold her own within the male-dominant NYSE.
Secondly, with such a limited number of females in the investing world – whether on the trading floors or independent investors-- the statistics that are linked back to men's ability to invest successfully are skewed in favor of women. Because of the overconfident male psyche, they feel they can enter into the investment world without any preparation or knowledge, therefore they stumble out of the gates. This is true for any person pursuing something that takes such precise skills and education. Those who argue that women are better investors do not factor that women maybe, in fact, just better at preparing. They enter the market on the proper grounds rather than going in blind, a habit that many men possess. But does that make them bad investors? Hardly...
Men are statistically more likely to make trades, according to a University of California-Davis study. Economists found that men were 45% more likely than women to make trades. And you can't make money if you don't make trades.
Lastly, testosterone has been linked to risk taking. Elevated levels of the hormone can lead to more “high-risk gambles.” But although the argument is that high-risk maneuvering is not the way to be successful in investing, I disagree. High-risk equals high reward.
Investing is –and always will be-- a man's game. They created it. They control it. They succeed at it.
Women (Brittany): What about the statistical research don't you get, gentlemen? Perhaps it is "a man's game" but us ladies sure know how to play it better than you do. As you fine sirs often say, "don't hate the player, hate the game." We will happily take the title of "Best Investor." It's already been proven through diligent research that we're built more adequately for the investing world.
Closing Arguments: Both gender's arguments prove valid points. But similar to investing, the numbers never lie. Making investment decisions strikes a fine balance between educating yourself on your future investment but also going with your gut or taking a risk; both are the extremes for the female and the male, respectively. So who wins? Statistically, it shows that women are in fact better at investing than men based off of the psychological data that women tend to take fewer risks and educate themselves on the market more thoroughly. We are by no means judging either gender by the way that they invest. It's important to remember that investing is based around your personality and character as an individual, not a gender.
Guys, don't fret. This information is likely misleading because a smaller percentage of females actually take the time to study the markets and actually invest in them. It may mean those females are "better" because they go the extra mile to seek advice if they lack the confidence to make an investment decision themselves. Just use that information as motivation to become a better investor by perhaps changing a few of your old habits...it is okay to ask for advice and guidance every now and then.
Ladies, don't gloat. It's not flattering and if you had that level of confidence, you'd be just like the guys!
Takeaway: At the end of the day, whomever is making more money should win the title of "Best Investor." So it's off to the gender races...and please add your two cents below.
*Also be sure to vote in our Facebook poll as to "Which gender is the best investor?"
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