Believe it or not, the hidden truth is that women often make for better stock market investors! This won’t be too surprising for anyone who has grown up reading the Geraldine Weiss financial advice newsletter of the 1960s (under the pseudonym G. Weiss, so her identity could remain hidden).
Most women would tell you when entering the stock market to invest, they are met with all kinds of information that is addressed to a stereotypical male investor. Worse is when they find themselves identified as natural savers, not investors. Weiss, despite having a degree from the University of California Berkeley, couldn’t get a brokerage firm to even consider her candidature. Speaking of what it’s like for women to invest in this day and age, the unfortunate fact remains that little has changed on the ground. It really is as bad as was shown in The Wolf of Wall Street!
Despite this, we are seeing brokerages and mutual funds become a thing of the past. Now, we are seeing the emergence of individual, mom-and-pop investors on platforms like Robin Hood. In fact, this is where you’ll find many up-and-coming women investors. Many professional women daytraders also have YouTube channels where they share their first-hand perspectives of what it’s like to invest in the stock market as a woman, which can be helpful in better understanding the challenges they face and the successes they have had.
As long as you stay away from Wall Street, you are the king of your own hill. You get to decide your own schedule. You also get to decide your trading strategy: a day trader, a swing trader, a trend trader, or even as an investor. Honestly, it matters little what your gender is at that point; the most important thing is if you are in control of your emotions are not.
There are successful female traders who are making a name for themselves in the industry. However, women typically experience a far wider spectrum of emotionality; in fact, in an emotional situation, a female companion/team member/colleague would be able to help you sort through your emotions quite efficiently. The mantra on the street is to be greedy when others are fearful and to be fearful when others are being greedy.
Given the emotional play involved, it is easy to see how women would be able to hold their nerve better. Besides, a quick search online shows frequent research studies find men’s brains to be greedier than women’s. That is something that can also be seconded by personal experience. This only elevates the aptitude of women in the world of investing.
Then comes motivation. Women are motivated by cooperation and coordination, as opposed to men who are likely to be motivated by competition. This again works in favor of women because they can come to a wise settlement and are often open to coordinating resources. Women also talk, as a primary way of coordinating, which enables consensus-building amongst one another. This can lead to more stable investing decisions, for the same reason that there are investing chat rooms, investing commenting sections on Seeking Alpha, and even the Wall Street Journal, where you can exchange information and opinion, nearly professionally.
But then, men are also motivated by pride, ego, and the propensity to gamble. All three of these parameters are anathema to the science of investing and the art of wise decision-making. That immediately elevates the status of women over the top of men. For example, women would be less hurt having to cut losses and close a position. On the other hand, men are more likely to make it an issue of pride. Usually, the implication is that they are going to magnify their losses. This often provides women with a competitive edge over the more impulsive sex.
Let us take a real-world example from our times– Catherine Wood. Ms. Wood is the chief executive officer at ARC Investment Management LLC, and she is a personal favorite of mine for several reasons. For one, she uses the highly flexible approach that most hedge fund managers would be exceptionally reluctant to deploy. This approach allows her to go after companies across sectors, capitalizations, and even geographies.
In her sight is a large-scale investment opportunity, that is centered around some kind of technological innovation. This should be said loud and clear so that the Warren Buffets and Charlie Mungers of the 20th century do not miss out on yet another technological revolution, just because they don’t understand it, and less so that we don’t have to deal with their arrogance in continuing to not understand it. Ms.
Wood has made the most of opportunities in innovative sectors. The fund has over 100% returns to show for the past year ending in mid-2020, and their exchange-traded fund trades as if the pandemic never even happened: ARKK. Ms. Wood’s success is representative of just how successful women can be when it comes to investing. Despite the challenges they face, women are quickly taking over the traditional “boys club” of investing.