It's a Battle of the Sexes - 3/2/13

In this week's edition:  It's a battle of the sexes. . . Is this email not displaying correctly? View it in your browser.

Men vs. Women Men Take the Trade; Women Take the Money As James Brown once crooned/screamed "This is a man's world…" Of course Brown wasn't referring to investing, but the statement does have application. Neuroscientist John Coates at Cambridge University, asserted that the overwhelmingly male composition of the Street is problematic. 'Men have 90% more testosterone than women, which spikes after a trade does well.  This amplifies hunger and tolerance for risk…while impairing critical thinking.  95% of the trading world is young men.  If there were more women . . . there might be more stability.' * Over the last 20 years, investing research reveals evidence that women fare better than men when it comes to long-term investing results.  I know guys, I'm just as insulted as you about this.  But I must confess, knowing what I do about investor psychology, I'm not surprised. New York Post columnist Maureen Callahan, opened a recent article with this question: "They say that if women ran the world, there would be no wars. If women ran Wall Street, would there have been no recession?" According Dr. Alok Kumar at the University of Texas the answer is: "Yep."   Kumar justifies this with data showing men are far more likely to bet when the odds are against them. You may remember the financial industry placing this odds off bet recently: lending anyamount of money to anyone who says he/she can pay it back won't turn around and bite us because "real estate values always rise."   But that isn't how things have ever worked, so calling this a risky bet is an understatement. When looking at the cast involved; not only on the executive level of the institutions laying these mines, but the policy makers making the field available in the first place…there's a bunch of men…and virtually no women. I admit, that's just an observation of your humble writer.  But more evidence exists. Callahan went on to report: 'Female CFOs are consistently better at maximizing revenue than their male counterparts. Looking for a larger pattern, Kumar broke apart Thomson Reuters' International Brokers Estimate System which contains every Wall Street Analyst since 1983, encompassing 3 million projections. Women were better predictors - often with less experience than men. Of the market's 48 disparate industries, female analysts outdid the men in 33 of them. There were more female "all-star" analysts than male and they far outpaced their male counterparts.' * The recent book "Top Dog: The Science of Winning and Losing," concluded that women are not averse to risk, but they assess risk better than men.  Men have greater confidence that the odds are in their favor when in fact they may not be.  Collectively, this tends to result in less than stellar outcomes for men when compared to those for women. In the 2001 publishing, "Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment," data collected from 35,000 households showed males trade 45% more than females. Further, guys generally "exhibit substantially greater self-assurance" even when the outcome proved they shouldn't have.  So what to make of these studies?   First, I want to make clear that the male impulse to "believe/bet against all odds," is neither stupid nor wasted...sometimes.  War may not exist without male involvement, but there are no shortage of instances where it earned freedom over oppression.   So...chin up guys.  Without us there may be no such thing as a free market to invest in in the first place.  But the fact is, sometimes the tactics necessary to create a legacy do not lend themselves to longevity. And the nature of successful investing, from General Warren Buffet down through the ranks, has more to do with perseverance than creation.   Our investment outcomes don't have to hinge on biological determination. Ultimately our outcome is based on our ability to cognitively manage our urges.  It is not our inclinations which have the greatest impact on our results, it is our behavior. For men and women alike, having a trusted advisor and advocate to talk to when managing feelings and opportunities involving money is priceless.  So if you're concerned (or perhaps even uniquely confident...guys), it's a great time to stay in touch with your trusted advisor.  If you don't have one, get one. As always, I welcome your questions and comments.   Marc Becker, AIF Managing Partner, Wiser Financial Coaching Columnist, The Advisor Sherpa  becker@wiserfinancial.com To read past articles and view past videos, visit: www.marcbecker.tv *(Paraphrased)