Why Women Are Better Investors than Men



Make no mistake about it. Numerous studies by banks, investment and financial institutions have concluded that overtime women are better investors than men. This seems counter intuitive; does it not? In the majority of households that I council, the men are far more likely to take the lead role in the family’s investment decisions. Why then do men statistically under-perform their feminine counterparts?

The answer is really quite easy although it may not be immediately intuitive to most. First of all, men have a little thing that women do not called testosterone. My theory is that it’s testosterone and not logic that leads men to adrenaline driven white knuckle investment experiences. The thrill of “hitting it big” and gaining bragging rights among one’s golfing buddies sometimes drives men to make highly imprudent investment decisions. This shows up when I look at peoples’ investments, where the client had no idea whatsoever about the amount of risk he was taking. What makes matters worse is that sometimes someone gets lucky and makes a huge return in a short amount of time. This is when someone, usually a man, can become highly overconfident and reason with himself that he is very brilliant at this “investing thing”. A false sense of confidence takes over and as it has been said, “pride goes before the fall”.

I saw this with my own father-in-law who became a stock picker in the early 1990s and turned his 1 million dollar portfolio into 2.5 million dollars in the next few years. Never mind for a moment that he punched a clock in a chemical plant for 40 years. He was now in his mind a bona fide stock picker. He bragged regularly at our BBQs about his stocks, his research and his unique ability to ferret out bargain stocks that turned to gold with little risk. Then the gut punch came at the end of the 90’s; the tech bubble busted. He would come over to our home and go immediately to the computer. He was nervous and twitchy. My mother-in-law would roll her eyes and say “there he goes again”. His portfolio did begin to climb back and then he got hit with the 2nd gut punch in 2008. He lost during this time over 1.5 MILLION dollars. He panicked, went to cash, and then missed the great rally between 2009 to current where the market climbed almost 300%. After all the angst and anguish he was back where he started. Never mind that if he had just stuck with a risk adjusted and well diversified portfolio he would have had 3 million dollars rather than just 1 million. He might have even had more quality of life and time with his grand-kids. He never saw value in diversification because he owned several stocks and he thought that he was diversified. He did not understand that stock with a similar correlation can all go down at the same time. He had no idea that he had built a portfolio that could wipe his family out - in a perfect storm.

The Greeks call this hubris, which is thinking you are more powerful than you actually are and then paying a terrible price.

Women are typically more logical, patient, and risk adverse. They are less driven by ego and pride. Women are more likely to accept advice and the idea that prudence in investing will yield the greatest return over time. We men can learn something from our feminine counterparts about investing and I would suggest that we should.


This material is for general information and education purposes only.  Information is based on data gathered from what we believe are reliable sources.  It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.  It should also not be construed as advice meeting the particular investment needs of nay investor.

Links to third-party web sites are provided as a convenience.  Provident Wealth Advisors, LLC does not endorse nor support the content of third-party sites. By clicking on a third-party link, you will leave this website where privacy and security policies my differ from those practiced by Provident Wealth Advisors, LLC.

  • Facebook Social Icon
  • LinkedIn Social Icon
  • YouTube Social  Icon
Contacts:

Copyright 2018 Provident Wealth Advisors, LLC

All written content on this site is for information purposes only. Opinions expressed herein are solely those of Provident Wealth Advisors, and our editorial staff. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation.
 

Fee based financial planning and investment advisory services are offered by Provident Wealth Advisors, a Registered Investment Advisor in the State of Texas. Insurance products and services are offered through Goodwin Financial Group . Provident Wealth Advisors, and Goodwin Financial Group are affiliated companies.
 

The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Texas or where otherwise legally permitted. This site is published for residents of the United Sates only.  Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined.  Not all services referenced on this site are available in every state and through every advisor listed.  For additional information, please contact us at 281.466.4843.

Provident Wealth Advisors, LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.

ADV - 2A                                                Provident1031.com is a Division of Provident Wealth Advisors, LLC.                                               Privacy Policy

Provident Wealth Advisors

25511 Budde Road

Suite 1002  The Caroline Building

The Woodlands, TX 77380

281.466.4843
281.466.4817

Info@providentwealthllc.com