Being involved with a company that trains people how to
actively trade in the stock market. I get to see first hand the
success or failure of our clients. Eighty percent of our clients
are male. But I’d wager that eighty percent of the successful
stock traders are women.
Based on this experience, I began to wonder why is it that women
tend to be better investors than men. I thought about it over
and over, and I could not ignore the facts. Women make
successful investors.
But why? I think it comes down to three simple words: EGO, EGO,
EGO. The one thing that most men have in common is a big ego.
Men tend to let their egos make their decisions for them. They
hold when they should sell. They buy in for fear of missing out
on that one big opportunity. In other words, they invest not to
get the best deal out of the market but invest so that they look
good (or not look bad).
Usually when people think of investing, they think of taking
chances and risks. But the truth is that investing has much more
to do with emotional intelligence than most people realize.
Emotional intelligence is the ability to think objectively about
a situation and not get too emotionally involved in it. Women,
in general, possess a high emotional intelligence.
This quality makes women great investors. Rather than investing
according to what will make them look good, women will invest
according to a plan—not according to what mood they are in or
whether they will be “right” or “wrong”.
Investing is not about being right or wrong. It’s about making
money. Women are able to put their egos aside in ways men have
trouble doing. This ability to set their ego aside makes women
great investors.
Need proof? Ask yourself this: if a man and a woman are lost on
a trip, who is more likely to stop and ask for directions? Women
are more likely to ask investment questions until they
completely understand the concepts. Men, on the other hand, can
be too afraid to ask the necessary questions because he may look
bad doing so. Women tend to come to investing with a mind to
learn. And when they learn, they execute solid plans. Men can be
heard saying they “know that a company is good”, whereas women
can usually tell you why the company is good.
As more and more women turn to investing, I think we will see
this trend of women outperforming men. A woman’s ability to put
her ego aside already gives her the upper hand in investment
strategy.
And because women on average still get paid less than men (a
situation that needs to change–pronto!), women can use their
inherent advantages to invest more and work less. So men can go
out, work hard, and earn a lot of money, whereas women can
invest more, work less, and earn a lot more money.