INVEST LIKE A GIRL BY EXECUTIVE WOMeN.
BY SANDRA SAKSENA – Executive-Women
Financial Counsellor
On one of the investment industry’s best-known figures, Paul Tudor Jones, was widely quoted stating that motherhood and investing simply don’t mix. “As soon as that baby’s lips touched that girl’s bosom, forget it,” said Jones, as he pointed toward his own chest during a talk at the University of Virginia. “Every single investment idea . . . every desire to understand what is going to make this go up or go down is going to be overwhelmed by the most beautiful experience… which a man will never share…”
Spoken like a true male who can ONLY think of, and do just one thing at a time!
“Like a girl” not always used in a complimentary way this phrase even today is a downer, an insult, a connotation of being weak, vacillating emotional.
Warren Buffet Invest like a Girl wow that title sure got my attention. Would Mr. Buffet ‘the oracle from Omaha’ think of this as a compliment or otherwise. When it comes to investing Mr. Buffett, of Berkshire Hathaway apparently is Ann Lofton. Being Buffet buff myself I can see why he would support a book like this because it resonates with his investment philosophy!
Buffet is an integral part of the mega testosterone boys club where I would say he has carved a throne for himself and remains at the helm though the majority of the members are two generations younger! What sets him apart form the roller coaster rides of the stock markets? Is he moving into and out of the markets in a testosterone-fueled frenzy, prompted by the adrenaline rush of the next bang or bust? So what makes Warren Buffett such an incredible investor?
Warren Buffett the investor approaches investing differently from the way most men do, for him its more temperament when it comes to investing success rather intellect. And his temperament tends to be more feminine than masculine!
What is he known for? –Patience and thorough research, never to buy/invest in the latest, most popular, most traded company if he can’t understand that business. He doesn’t take excessive risks. His goal is to never sell the companies he invests in. He doesn’t do something just for the sake of doing something.
“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
So let’s see how his philosophy is in sync with girls (boys will be boys so why not women are girls!)
Women investors
Louann Lofton describes seven characteristics that most women have in common with Buffett, making them better investors than most men.
• TRADE LESS OFTEN THAN MEN
They tend to take a longer term view, not so much the ‘revolving’ door syndrome
• LESS OVERCONFIDENT
Women are more willing to admit what they don’t know and are more conscious of their scope of competence.
• MORE RISK-AVERSE
They prefer greater margins of safety, and avoid high levels of debt.
• LESS OPTIMISTIC
This makes women more realistic investors. As Buffett has often stated “When investing, pessimism is your friend, euphoria the enemy.”
• RESEARCH MORE
They put more time and effort into examining potential investments and consider alternative points of view.
• LESS SUSCEPTIBLE TO PEER PRESSURE
Women are less willing to follow the herd. They are more comfortable to be contrarian investors than men.
• LEARN FROM THEIR MISTAKES
Having made a mistake, women are more likely to admit it and learn from it.
The end result is that women investors tend to produce better and more consistent outcomes. According to the USA research Lofton refers to, female-managed hedge funds have delivered an average annual return of 9% over many years, compared to less than 6% by male-managed funds. Research also shows that during the financial crisis of 2008, women-led funds dropped by less than 10% while the male-led funds fell by 19%.
Continually unfolding science indicates that testosterone is responsible for herd-like risk-taking behavior from men in the financial markets. Studies continue to show effects of testosterone and cortisol levels on investment decisions a link between chemical levels and trader behavior.
High levels of testosterone led to increased risk taking. The risk taking apparently is not based on superior knowledge or skill but rather a chemical reaction to testosterone! Cortisol levels rise during a market crash, increasing risk aversion among traders and exacerbating the decline. Since women have significant lower testosterone levels, they are less prone to the irrational exuberance associated with stock market bubbles.
Patience and good decision-making help set women apart, traits that make female investors more like Buffett and less like well, the testosterone brigade. The more conservative approach to investing is generally associated with a variety of traits, including greater risk aversion more concern about losses and less frequent trading. According to popular (male) logic, these are all negative attributes to have when your objective is to make money in the financial markets.
For as long as we can recall the feminine approach to investing has been branded as a losing strategy, let’s look at how the women have fared. Men have dominated the financial services (We all know that).
According to Catalyst, a nonprofit promoting women in business, over the course of five years, companies with women on their boards had average returns on equity of 15.3 percent, while companies without any female representation showed a reported a lower 10.5 percent. (Return on equity is a figure that gives a sense of a company’s ability to generate profit from shareholders’ investments.) The Finnish Business and Policy Forum EVA perceives a clear correlation between women in management and profitability, which cannot be explained by differentiation of companies or fields of business. A similar effect appears to exist with women on boards of directors. Barclays’ Women in Leadership Total Return Index, which consists of American companies with a female CEO or whose proportion of female board members is at least 25% aims to capitalize on the finding that companies with female leaders tend to outperform those where women are relatively absent. (Effective July 1, 2014, Rothstein Kass ceased operations as a professional services firm. The majority of Rothstein Kass professionals have joined KPMG LLP).
The Rothstein Kass WAI Hedge Fund Index released in January 2013, provided statistics confirmed that women-run hedge funds had outperformed the universe as large hedge funds run by women outperformed those managed by men by 6 percentage points over a nine-month period in 2012.
In addition to providing a view into the investment and business outlook of women in the alternative investment industry, this study gives a snap shot of the evolving roles and opportunities for women in hedge funds, private equity and venture capital. Some interesting if not new facts emerged.
“Although I have absolute confidence in my abilities, the fact that this industry is run like a country club—at best, locker room at worst—makes it difficult to be seen as anything other than an object for amusement. Women just aren’t taken seriously and if you somehow make it into one of these places on your credentials, you are relegated to tasks no one else wants to do,” said one respondent. “I have worked in several male-dominated firms. Typically, I see women only in a marketing role, which reinforces the stereotype of marketing ‘girls,’” said a respondent.
Interestingly, investor respondents are among the most optimistic about an increase in the female ranks, with 57.7 percent agreeing or strongly agreeing that there will be more women in the alternative investment industry in 2014.
Many of the women polled continue to believe that performance, not affirmative investing, is the key to increasing women-owned and –managed fund assets under management.
“I think good returns, having a large investment in the funds and being a good fiduciary are plus points What attracts capital,” according to one respondent. “My gender gets me noticed sometimes because there are so few women hedge fund managers that manage over $1 billion, but I have never heard any overt reference to my gender as a plus or minus. My guess is that it is harder to compete if you are not a standout performer.” Another respondent put it even more pointedly: “Giving money to women-owned firms is not the way forward— rather it is to look broadly and include [women] in the search. … I would rather see women-dominated firms grow because they perform better.”
According to Dorothy Collins Weaver CEO and Chairman of Collins Capital, which she founded in 1995 to construct multi- manager, multi-strategy hedge fund portfolios and part of the team which conducted this survey
“I don’t know many successful women fund managers who feel they’ve been handicapped because of their gender. In many ways, I think being a woman is an asset, especially when dealing with endowments, foundations and high-networth investors. Relationships are essential to these types of investors, and I think many women fund managers may have a more open dialogue with their investors than their male counterparts do. That dialogue is an important differentiator, especially in this environment.”
Interestingly, investor respondents are among the most optimistic about an increase in the female ranks, with 57.7 percent agreeing or strongly agreeing that there will be more women in the alternative investment industry in 2014.
My take as a woman
Rely on Logic
Take the biology out of the picture. Ignore the testosterone-fueled need to take risk and the cortisol-fueled need to flee when times get tough. Instead, think before you act. Take your time, plan carefully and make deliberate decisions.
No Market Timing
Err on the side of caution and accept the fact that you are probably not going to make perfect investment decisions that enable you choose the perfect time to buy into the market at its trough and sell at its peak. Instead, buy when you can afford to buy and sell when you reach your goal. It’s a simple to follow, low-stress plan.
Build relationships
With the companies you invest in as well as the people whose money you invest.
So, consider investing like the girl you are with Mr. Warren Buffet’s advice! –Your portfolio might just thank you for it.
Encouraging news – 57 year old Arundhati Bhattacharya, took over as the new chairperson of the State Bank of India is the first woman to be appointed to the top job at the country’s largest lender.
Her elevation came after the glass ceiling was broken in 1996, when Tarjani Vakil took over as head of Exim Bank. Ranjana Kumar, was appointed chairman and managing director of Indian Bank, followed Vakil’s appointment.
In recent years, Indian banking has seen a few more woman heads. Shubhalakshmi Panse, Vijaylakshmi R. Iyer and Archana Bhargav head Allahabad Bank, Bank of India and United Bank of India, respectively. In the private sector, Chanda Kochhar and Shikha Sharma now head ICICI Bank and Axis Bank, respectively.
At the Reserve Bank of India (RBI), Shyamala Gopinath, K.J. Udeshi and Usha Thorat have all been deputy governors. Closer to home, Mira Hamad Abdullah Al Attiyah joins a select group of talented women who run investment banks in the Gulf. Sarah Al Suhaimi, is chief executive of Saudi Arabia’s NCB Capital and Nahed Taher, is the founder and co-chief executive of Bahrain-based Gulf One Investment Bank.
In Kuwait, Maha Al Ghunaim is the chairwoman of Global Investment House, while Shaikha Al Bahar is the deputy CEO of retail lender National Bank of Kuwait (NBK), having previously been CEO of its Kuwait operations.
