Jason Zweig had a very interesting article in the Wall Street Journal “For Mother’s Day, Give Her Reins to the Portfolio” referring to a recent study and concluding that you should let women handle your investment portfolio, I thought about this and came to the same conclusion. Here is why I agree with Jason Zweig:
The study points out that women tend to feel fearful whereas men feel angry in times of crisis and these difference in emotions construct a different viewpoint
Those differing emotions lead to divergent viewpoints. Seen through what Prof. Lerner calls “a lens of anger,” the world seems more certain, more amenable to our control and less risky. Viewed through a lens of fear, however, the world appears full of uncertainty, beyond our control and rife with risk.
Have you noticed this pattern? Being involved in the investment world and having the pleasure working with some great female advisor’s I came to realize that this pattern seems to hold true. My Female collegues saw more uncertainty than male counterparts leading them to make more conservative decisions and therefore better returns.
I also noticed this in my personal life, I have been caught calling the bottom three times in the past year and deployed some fresh money into the markets whereas my fiance has been more pessimistic (and rightly so) about the markets and continued to warn me. I have also been more willing to leverage for better returns and she hates the concept.
According to the study women’s risk-adjusted return beat men’s by about one percent per year and this is due to women holding more conservative portfolio’s and looking for lower returns than men do…..hold on… they are looking for lower returns and are beating men by one percentage point? Interesting.
In the testosterone-poisoned sandbox of the male investor, the most important thing is beating the other guy; the second most important: bragging about it. The long term is somebody else’s problem, and asking for advice is an admission of inferiority. Worrying about risk is for sissies. Leverage is good, since it raises returns — while the market goes up
For men the main goal is to get the best possible return and “beat the other guy” while for women the primary concern is safety, now imagine Wall Street being concerned with safety over highest possible return would we find ourselves in this mess?
I took a quick unscientific survey and found out that in almost 100% of the housholds the husband makes the investment decisions, maybe it’s time we let our wives have more control in our investments managment.