Women investors have a better control of their emotions than their male counterparts.
How did women investors cope during the recent market volatility? To hear them tell it, not as well as men.
According to a recent investor survey conducted by Millionaire Corner, nearly 51 percent of women felt they were personally better prepared for August’s market downturn compared to the 2008 economic crisis versus 56 percent of men. Likewise, just over 60 percent of men said that their experience three years ago helped them to better cope with recent events compared to nearly 49 percent of women.
As the market lost and gained, slumped and recovered, women were more likely than men (13.5 percent vs. 10.1 percent) to call their advisor to ask questions about what should be their course of action (by the same token, more women than men reported that their advisor had reached out to them to answer questions and offer reassurance).
These findings are illustrative of the differences between women and men investors. As our recent interview with LouAnn Lofton, author of Warren Buffet Invests Like a Girl found, women have a more risk-averse mindset than their male counterparts. Studies have shown that women investors have a better control on their emotions. They are not as likely to panic and sell-off stocks, nor are they likely to trade as much or be prey to peer pressure regarding stock purchases. They are more buy-and-hold investors.
In our survey, 15.3 percent of men said they had moved their investments into cash or other less risky instruments versus nearly 10 percent of women. It is likely that these women’s portfolio were already aligned with their conservative or moderate risk tolerance.
One anomaly in our survey is that roughly seven percent more men than women (22 percent vs. 15 percent) said they had conducted independent research to chart a course of action in the midst of the market downswing. In study after study, Lofton told us, one of the hallmarks of women investors is that they conduct more research than men. Giving them the benefit of the doubt, this finding could mean that men are simply playing catch-up.
Another characteristic of women investors is that they feel less confident than men (hence the penchant to conduct more research) This gives them a tendency not to move as deliberately as men. This, too, was borne out by our survey. When asked about the various actions they took during the August downturn, just over half said they had done “none of the above” of the options presented as apposed to just under 40 percent of men.