Are Women Better at Investing than the Average Trader?

[Justo]

This question first came to me while I was thinking of another blog that I intend to (hopefully) complete one day, the basis of which was about having emotional control while investing. I began to think about how backwards the thinking is for the majority of investors out there and about an ex-girlfriend of mine (keep your pants on fella’s it was PG) when it dawned on me that I had something great to write about here. Let’s explore this question further shall we?

What is the thinking for the majority of investors out there? As I come to see it, the majority of people buy while the market is going up and sell while the market is going down. They are drawn in by the lure of increasing prices and get frightened should their stock go through any sort of decline. This is also especially true of the technical trader, who often times will buy as the market is advancing, as their “magic formula” shows that the stock price is advancing upwards, hoping that the climb will continue up to the peak of financial independence. And if the market declines? Well abandon ship! “SELL! SELL! SELL!” they will yell, hoping to retain as much of their hard earned principle as possible so they can start buying as the market turns, bringing with it another perilous journey up the slopes of a monetary Mount Everest. But enough about the market, let’s talk about girls.

The one thing you should know about my ex is that she loved to shop. Almost every day we hung out she would tell me that she bought some new earring or bathing suit or a new pair of shoes or a purse or some lip gloss or new sunglasses or a new bra or a ring or some glitter or a necklace. Personally I am terrified about spending my money on such frivolous things, and I still wonder why she bought all the things that she did, but her rational for buying those items rings true to me to this very day.

They were on sale.

Imagine if the whole of the investment community took this ideology to heart, what a world we would live in! Instead of newscasters saying that the market took a beating today they would rejoice! “Stocks are becoming more attractive yet again today as the S&P dropped another 3% on heavy volume – the second day in a row that stocks have gotten cheaper! Mining investors faired even better, with leading companies like Goldcorp losing 5% on the day, making its price even more affordable! And some prominent analysts are optimistic that the stock price will continue to drop in the upcoming weeks and months.” They would go on like this, all the while having a large sign with bold letters reading “SALE! 30% OFF” hanging above their heads.

Now I’m not saying you can’t make money by buying high and selling low (although I do think it would be extremely difficult) I just don’t see the logic in it, as even fools can win the lottery. All I’m saying is that the justification for buying high and selling low doesn’t make financial sense and that the average investor (and you technical traders out there) should be careful should you continue along this path and have fears of losing your principle.

What DOES make sense is this: “Buy low, sell high.” This statement is both simple and logical. And should the market decline, well then it’s time to buy more of course, not sell off at a discount!

So this brings us back to our original question: Are women better investors than the average trader?

The answer is,

Undoubtedly,

Yes.

[DCA]

I think it is safe to say that the typical successful female investor does better than 50% of the male investors.

D

[garilou]

Hi DCA!
And hi Justo.

DCA knows me from long ago, and knows that my posts are long because I always do a lot a research before I post or reply to a post.

Justo you do not know me because I have been so silent for so long.

But I have read all your posts, without feeling the urge to reply.

Anyway, I used to love this forum, for a while it was very animated and brought very interesting discussions, and to some friendly relationships (apart a few exceptions)
My activity on this forum took so much of my time that I had to take the difficult decision to step aside.
[It does not mean that I have been idle all that time: although I have been trading for more than 25 years, I have taken the time to study more, and I have developed pretty useful decisions tools, and one of those days, I will write a pretty long post about it them.]

But because I am a woman, I could not resist to reply to your post.
It is long, but this time, not because I did a lot of research. I reply pretty emotionally.

This subject is already somewhat sexist: comparing ALL women with the average trader.

Your post is pretty long, you bring us very new and surprising concepts, like "Buy low, sell high", some very controversial ones too: "should the market decline, well then it’s time to buy more of course (underline by me), not sell off at a discount!"

The rest of your post is terribly sexist!
It was a man, a very renowned advisor, when there were to discount broker, who had me loose so much money by making me buy stocks that had lost 30% of their value! And buy more when they had lost another 10%! I was just a beginner at that time, and have learned a lot from those mistakes.
And I understood that if my mom had been so successful in her investing, it was not because HE was her advisor, but because SHE had inherited from her father the sense of good investing. He proposed, and she decided, whereas I as a beginner, almost blindly obeyed to his proposals, not having yet understood the hidden agendas brokers had.

The comparison with your ex is simply not serious!
Would you like me to tell you about the buying habits of my loved husband who died 4 years ago, and take this as an "ideology" that we could try to apply to the stock markets?
He was a compulsive and terrible buyer, buying cheap things, just to realize a year later, that he should have bought the more expensive (and better) one.
So he sold the first (with a loss for sure), and only then bought the right one.

He laughed at me because I saved so much on small things, and was astound when I decided promptly to spend quite an amount on something that I thought was going to give more value to our home.
Nevertheless, although he had never learned, looking at me trading, he started to do it too.
Very fast, he became extremely efficient and successful, almost doubling his RSSP in the months when he was at the hospital.
His technique was so simple, but I have never heard of anyone talking about it. And even if I know his strategy, I have a hard time trying to reproduce it.


I do not want to start discussing the concepts of "buy low, sell high", or the one of stocks being at discount.
But I would like to know what exactly, apart from your experience with your ex, brought you to the conclusion that the answer is "Undoubtedly yes".
Women go shopping when there are huge sales? And that men don't?

You know what? When I, you or your ex go shopping and buy something on sale, this is not with the intent to sell it at a higher price!
It is with the intent of using it! (At least I hope so)

I bought my "new" computer in July, when the crisis was almost at his worst (although I think the worst is still to come), I got a DELL computer at an amazing cheep price, but I would never have bought DELL's share at that time! I was short on it, and with the gain, I could have bought many more of their computers!

Please make your point with more serious facts.

To DCA: you know that I enjoyed a lot your thoughts and comments, but your reply is somewhat sexist too, (but I am sure that none of you can feel the difference, because you are males, and not as sensitive as me to sexist details.)
Your reply compares the "successful" female to 50% of the male investors.
You say that it safe to say... from where to you hold this? How safe is it really to say that? And to say what exactly: is my English too poor?

Please both of you, compare apples with apples and oranges with oranges.

Compare the average woman to the average man, and/or the successful female to the successful male.
And bring arguments to your conclusions.


If I had been able to reply very shortly, I could have simply replied (sorry for the French, SSP) to both you posts: "N'importe quoi!"

I take to occasion to say "Hi" to all my previous friends on this forum, starting with the SSPs, and one of the few who still posts, with whom I have had  some arguments, but who I respect so much for the seriousness and usefulness of his posts: Tara.
Justo, happy to greet you on this forum, and DCA, happy to read you again

Louise

[DCA]

Hello Louise,

I, just like everyone else, am indeed sexists.  (I should be picky and say 'gender bias'.)  Last I checked I did indeed have a gender.

That aside I will agree that some of my posts are a little terse and off the cuff.

What my comment was based on is my experience in engineering.  (with emphasis on my time many years ago in university.)  At the time there was a general complaint from feminists that engineers were sexist and discouraged women from entering engineering.  What I found was that the majority of women in engineering found the pressure against them coming from outside engineering.  Second, that often women would not apply for engineering despite good marks, while on the other hand, a man with low marks would try.

I do not claim to understand all the reasons for this but I know that as a group in our class year the average mark of the women was higher than the overall class average.

My working life has done nothing to dissuade this bias.  Women in engineering (not necessary women in general) are better engineers.

I extrapolated this logic from engineering to stock trading.

Finally, I would point out that I threw a tautology into the original post.  Defining group 'A' as successful (makes money) and comparing against group 'B' (which includes males that lose money) insures that I am right.

Except the last few weeks my portfolio has been screaming at me: "Wrong!  Wrong! Wrong!"

My non-gender biased opinion on how to weather the current market conditions is to follow the Douglas Adams portfolio management advice.

D