Despite the fact that there aren’t many women in the stock market industry, many researchers have found that women possess better qualities than men when it comes to investing in the stock market. Some may say that it’s because they’re underrepresented that they’re able to create better decisions as they’re more cautious, while others may feel like they have something to prove to their male counterparts.
However, if this underrepresentation is the cause of their strengths, does this mean women will start to possess the same negative attributes as men if they become increasingly represented in the industry? That’s something that we’ll have to wait and see about, but for now, there are several traits that many people believe women possess that men don’t, and here are just a few of them:
They’re Not Overconfident
Trading in little amounts and studying the best investments you can make (Money Morning has the info) is the key to becoming a successful investor. Carrying out rebalancing, withdrawals and contributions will create a portfolio that can catapult you into the market but instead, overconfidence is what contributes to a lot of the trading seen in the stock markets.
This overconfidence when it comes to the knowledge and skills people possess is what causes them to think that they can “beat” the market and trade successfully. This trait is often found more in men than women. However, men can’t take all of the blame, as some will find the hormone testosterone to be the main culprit as it can provide this heightened optimism, contributing to the competitiveness that they can possess. This also gives them their conviction that they have what it takes to outdo the market.
It is these personality traits that can in fact cause increased risks as they underestimate what risk is involved in the investment they are making. This is a costly strategy in trading and is something that was demonstrated in a recent study which found that men are twice as likely to invest all of their savings in stocks than women. They’re also 6 times more likely to switch their portfolio from 100% bonds to 100% stocks, making ‘big bets’ that are incredibly risky.
These risky bets can really lead to some unfortunately financial consequences. The next thing you know, your credit may plummet. With no savings, you may need help getting by. Obtaining a loan with bad credit can be really expensive, not to mention plain old difficult. You usually have to find lenders that specialize in loans for people with bad credit.
They Have Long-Term Focus and Patience
Women are found to have more patience than men, meaning they won’t constantly monitor the stock market for changes. It is these changes in markets that can lead to impulse reactions as you feel like you need to react to what’s happening. However, women are found to take more time to study and evaluate a situation, without making knee-jerk decisions when a current crisis occurs, retaining the belief that things will turn back around.
Remaining steady under pressure, they’re less likely to start selling their shares when a market shows signs of rising. Equally, they won’t just sell their stocks when their value to starts to drop and will instead wait until they’ve regained momentum.
What Can Women Learn from Men?
Despite the fact that they have this calm exterior and patience with the fluctuating stock markets, women do still have some lessons to learn from men when it comes to investing in the stock market. While they shy away from high-risk investments and can remain unaffected in a moment of crisis, this can lead to them being over-cautious and not carrying out investments at all. Therefore, what can be seen as an advantage, can actually be a disadvantage for them, meaning they’re too scared to start experimenting in the stock market.
Many will put their money into property, saving accounts and so on, and because of their in-depth research into everything, they may become hesitant, taking years before they start to invest in the stock market industry. They can also be influenced by partners and won’t take charge when investing for their futures; but as they live longer, making the right financial decisions earlier on in their lives will create better stability for them in their later years. With 9.5% annually being returned into the stock market, long-term stocks create a far better income for them than putting money into other avenues, such as property or bonds.
In summary; by gathering up some of the assertion that men possess in the stock market, women could start to invest wisely in a diverse portfolio of stock, creating a powerful financial tool that they have behind them. Uniting both sexes’ characteristics would create a formidable force within the stock market.
Liam Moore works as a stock broker and enjoys sharing his tips and thoughts online, discussing the current market and trends.