August 6, 2014

Warren Buffett Invests Like a Girl

“Too much testosterone… can encourage too much risk taking.… The way women tend to approach investing is healthier and calmer, and it’s the way we should all approach investing,” according to author LouAnn Lofton, author of Warren Buffett Invests Like a Girl--And Why You Should, Too.
·  Women spend more time researching their investment choices and tend to take less risk than men do. This prevents them from chasing "hot" tips and trading on whims. Women are also more likely to seek out information that challenges their assumptions.
·  One study found that men trade 45 percent more often than women do, and although men are more confident investors, they are also more susceptible to becoming overconfident. By trading more often—and without enough research—men reduce their net returns and increase transaction costs and capital gains taxes.
·  Women aren't as susceptible to peer pressure as men are, which results in a more levelheaded, patient approach to investing.
·  Women have less testosterone than men do (not a surprise, we know). New and continually unfolding science points to the possibility that testosterone is responsible for herdlike risk-taking behavior from men in the financial markets.

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