Hi Guys,
This is not a new insight but it has remained consistent over time that women are better investors than men over extended timeframes. As a gross average, women investors generate roughly 1% better outcomes than men do. We can learn from their success characteristics and rather easily profit from them. What are the primary actionable lessons?
Women investors' (1) do less trading and, (2) buy and hold for longer timeframes. These are not very challenging tasks, but they do require patience and perhaps less exposure to daily market returns that seem to command action. A little less attention and a little less action might just improve our portfolio performance.
Here is a Link to one article among many that recommend this simple strategy based on women’s historical stock market record:
https://www.moneylion.com/learn/women-and-investing-part-1-lionomics/There are a ton of similar articles that tell the same tail. Enjoy!
Good luck and wishing you additional profitable investing results,
Comments
"Women have money to invest, but they tend to prioritise cash savings." (FT citation below.) Money Lion says that women take on less risk. Okay, but what's the impact of that on their total portfolio, not just on the fraction that they invest?
While most men tend to invest, most women do not. Thus the women who do invest are by definition not typical women. "A separate study by YouGov found that 55 per cent of UK women said they had never held an investment, compared to 37 per cent of men."
So the conclusions are based on comparing a sample of typical men (i.e. male investors) with a self-selected (atypical) sample of women. Money Lion did not control for this.
All quotes are from an FT article, Do women really make better investors than men? , that discusses the same Warwick study as does Money Lion.
https://www.ft.com/content/f3835072-66a6-11e9-9adc-98bf1d35a056
Apparently the subjects of that study come from Lake Woebegon, because both the men and the women outperformed the market index, the women by substantially more. If we're going to draw simple conclusions from studies like these, should we not also conclude that on average all investors beat the market?
I'm not saying that the assertions by Money Lion are necessarily wrong, just that they don't follow from the studies cited. Reality is more nuanced.
While Lake Woebegon may be atypical, based upon the verbal descriptions of the population; I would be wholly interested in an in depth study of that area, relative to monetary investing styles and total returns.
The Investment News from 'Lake Woebegon'.
"Well, that's the news from Lake Wobegon, where all the women are strong, all the men are good looking, and all the children are above average."
The sign-off is so well-known that social scientists use the phrase "the Lake Wobegon effect" to shorthand a relatively complex human behavior known as "illusory superiority."
In simple terms, people believe they are better than others, despite having little evidence to support their belief.
>>>We do read/hear the above, in bold, from time to time from those who feel they are well attuned to the pulse of the global investment world.
Good Evening,
Catch
Thanks for your interest and comments.
My submittal is not my “thesis”. I was simply reporting data that women do very well indeed when they elect to invest in equities. The sources of that data are numerous indeed. Here is yet another Link that reaches the same conclusion:
https://www.investors.com/news/women-investing-stocks-outperform-men-studies/
The article references an extensive study conducted by Fidelity. I assumed that reference is valid and did not check it. Note that the article gives identical reasons for their conclusion as I did. I suppose great minds think alike. On second thought I should be careful here since the complete quote goes as follows: “ Great minds think alike, though fools seldom differ.”
Regardless, women win most of the time. Just my. Opinion.
By that definition dead people should make the best investors of all. Talk about “longer time-frame”.
Umm ... possibly genesis for a new type of mutual fund?
The Dead Man's Fund
How the world’s worst investor fleeced clients who couldn’t complain.
https://longreads.com/2017/11/09/ameritor-dead-mans-fund-charles-steadman/
Other attributes: nerves of steel, consistent performance, won’t jump ship or engage in office backbiting,
Never trades, no deviation from mandate, very long time horizon. From Voya's page: Is the manager alive? Don't know, can't tell
The Fidelity study cited by Money Lion looked at "retirement savings accounts", where women were "more likely to more likely to have their savings allocated in a more age-based allocation of investments than their male counterparts." Not in equities as MJG wrote, but in funds comprised of bonds and cash as well as of stocks.
Of course they were more likely to be invested in a single target date fund. That's the current default for a "retirement savings account". If one pays no attention to "investing" as women are more wont to do, (see above), that's what one gets. This isn't investing prowess. It's another factor that Money Lion didn't control for.
From a TIAA study "based on a 2012 cross section of more than 600,000 TIAA participants": Participants "who had joined plans with target date defaults held a median of one fund, generally the default option." It seems that the majority of "retirement savings account" participants don't "elect to invest in equities", their employers do.
@hank-
Poor Jud is dead...
A candle lights his head.
He's lookin' oh so purty and so nice.
He looks like he's asleep...
It's a shame that he won't keep...
But it's summer and we're runnin' out a' ice.