Women Make Better Investors than Men.
Recently, I read some things that shocked me about women and investing. One article indicated,” Women are more risk averse than men and less likely to invest in the stock market.”
Another article reported only “ 26 percent of American women invest in the stock market.”
How could this be the case when, “WOMEN control 51% of the wealth in America?”
To me, this all reads like one, great big challenge; I knew it was high time to learn how to invest in the stock market. As an entrepreneur for twenty-five years, with two businesses under my belt, I already knew how to manage money. So, how hard could it be to hoist my pants like a man, throw caution to the wind, and pick some stocks?
My husband, who works in the financial sector, has always done our investing for us, and he’s done it well. That is, until this past February, when I started investing money from my own SEP-IRA that was just sitting in a cash position with TD Ameritrade. For about four months now, I’ve been investing my own money and I’m now “up” a whopping 40% overall on my stocks.
I was two months into investing, and my husband turned to me and said, “Wow! You know how to pick them! You’re good at this. Maybe you should start investing more of our money.” I’ve been married for 26 years, and in that time the only interest I’ve ever shown in investing has been with real estate. Because women love houses, right?
In any case, it felt good to hear my husband say I was capable of putting our hard-earned money to work for us for the long haul, even if not in real estate. But the reality is, women need to know how to invest even if we don’t want to, because as we age our partners may not be around to keep our hard-earned money working for us. Some 80 percent of married women outlive their husbands, according to the U.S. Census Bureau. That information alone fueled me to learn how to invest. And since then, I’ve realized nice gains on my own investments.
I agree that women are more risk averse than men. But I also think that risk aversion is the very thing that could make women better investors than men, once they learn how to invest. I also attribute my own newbie stock market success with making financial decisions with both my heart and my head. Men, from my experience, tend to make financial decisions with just their noggins.
Still, my timing for learning the ropes couldn’t have been worse. I entered the stock market just before the COVID-19 pandemic entered the United States, and I lost (gulp) 30% of the money I invested, almost overnight. But only on paper. Luckily, I held my positions when the stock market plunged and didn’t have to lick my wounds later.
Why did I hold? My head told me to sell before the losses were too big to recoup, but my heart said, “Wait! That is my hard-earned SEP-IRA money we are talking about! I’ve already risked some of it by putting it into the stock market. If I sell…it’s gone forever. If I hold, I should be able to gain at least some of it back, right? Even if it takes me a couple of years?”
And then my head said, “The stock market always comes back. But, what if it doesn’t?” My head kept saying SELL! SELL! SELL!
My risk-aversion to losing my hard-earned money, once I invested it, is what ultimately saved me from being reactionary. In the end, my heart won the debate, and that turned out to be my first real lesson in investing money. Ladies, the real trick is getting past your aversion to risking, at least some of it, in the first place.
Simple Rules to Investing:
Rule #1: Get financial advice if you need it. Invest.
Rule #2: Stick to your guns.
Rule #3: When it’s time to cut your losses or take your gains, do it, and don’t look back.
There’s this thing about women people should know: We don’t like to fail, and we are diehard once we put our hearts and minds to something. If we do fail in the end, you can trust we gave it our best shot.
I started picking stocks with both my head and my heart. Those “feel good” investment decisions were the ones that got me investing in the first place. Sure, I did my research and used my noggin too, but when I started believing in where I was putting my money to work, investing felt like less of a gamble and more like a payday for my research.
I stood back and watched my stock picks rebound, and almost overnight they not only recouped, but I was suddenly watching my investments grow. I was making good decisions along the way. Like, I always kept a significant position of my money in cash. I didn’t invest it all. I also bought DexCom (DXCM), held it for a while, and sold it at its peak. I made out like a bandit on that stock (I gained almost $50 a share), but I had a feeling it was time to sell. Why? There was just too much happening with that company all at once. Sure, I got into the weeds on why I thought the stock was going to fall, but in the end, I followed my heart. I sold my shares just as DexCom earned Fortune 500 status, cashed out on my gains, and watched as my instinct proved to be right; the stock took a sharp decline, and I never looked back. I moved some of my gains into cash and invested in more stocks. (I love DexCom and hope to ride that stock again. It’s a great company.)
But, Moderna, for instance, is a different matter entirely. I bought stock in Moderna (MRNA), early on, from a sea of potential COVID-19 vaccine players. (I’ve talked about this stock before in a past blog post.) I’m die-hard with this stock, and I will be hard-pressed to let it go in the same way I did DexCom. Despite the news surrounding Moderna, which pivots almost daily, I’ve been holding on and acquiring more of it, even though my head has tried to get me to pull back from it more than once.
“Moderna is an American biotech company focused on drug discovery and drug development based exclusively on messenger RNA.” And they are a major player in the COVID-19 vaccine game.
What I’ve come to realize is that Investors are like kids in a sandbox. They dump stocks like schoolyard children dump friends in a tantrum. Investors get too emotional and overly reactionary. As a mom, I want to tell them to take a five-minute time-out. Think about things. Cool off. And, I want to pat them on their tushy butts and tell them to get back into the sandbox with the rest of their friends, the other investors who picked the same stocks for the same reasons.
But I get it. This is your hard-earned money we are talking about, and no one wants to lose it. But, it’s my sandbox too, and as a woman, I still want to send the reactionaries into a big time out to save them, and me, from some unnecessary panic and potential heartache.
I bought Moderna before the US government announced they were a major player in COVID-19 vaccine development. Why? Because, with or without a COVID-19 vaccine, this company is working on some pretty awesome breakthrough science with something called Messenger RNA. And, Moderna just very well could be on the brink of success despite COVID-19 vaccine outcomes. Plus, they are working on preventing diseases. What’s not to like about that? I picked this stock with my heart, not my head.
Picking the winner of a vaccine stock is, I’ve read, like picking the winning numbers in a lottery. It’s practically impossible. Did I pick the winner? Time will tell, but I picked Moderna out of all of the other companies, because I liked their story. I liked what they do. I believed in them. And, believers don’t cut and run when things get tough.
Rule #4: You very well could lose your money. Be smart about when you buy and sell. Get more financial advice if you need it.
Not long after I picked Moderna, the government gave the company a huge thumbs up on their Covid-19 vaccine work and, even I couldn’t believe it. I sat back and watched as my stock pick began to soar.
Fauci then announced he was optimistic and “bullish” about Moderna because their vaccine seemed to work. And, the stock takes another walk in the clouds.
Then a vaccine expert screams (and, I extrapolate,) “Whoa! Hold your horses. There’s not enough data yet and too few people were tested to really know if this thing works.” And with that piece of news, the stock moves in the opposite direction. Quickly. People were afraid they would lose their big gains, and an investor sell-off was evident. I was losing my big gains every day. On paper.
But, I held the stock and my heart reminded my head that if Fauci says he’s “BULLISH,” heck, I could be too, and after all it’s only Phase 1 of a Clinical Trial. It’s new, and we don’t have enough data on the vaccine yet. Plus, I believe in the company, right? Even if they don’t hit the nail on this head this time, they are working on critical vaccines, and at least one of which has the propensity to maybe end a global pandemic. My heart held the stock. And, my head bought more.
Rule #5: Remember why you bought the stock in the first place.
My ride with this stock suddenly felt like 7 seconds on a bucking bronco, but I was learning lots about the stock market, but most importantly, I was learning about my own tolerance with my own investments in the stock market. Someone from the Phase 1 Clinical Trial speaks out and says (and again I extrapolate here), “I got 24-hour flu like symptoms from the trial vaccine, at the highest dosage, but I’d do it all over because the vaccine seems to work. And, vaccines are good for the population.”
That piece of news causes another selloff; I watched as the stock took another nosedive and approximately 60% of my paper gains by now have bitten the dust. #SMH
What? There’s a stock sell-off because a trial patient, who received the highest dosage possible, got lightheaded and fainted from a possible global pandemic-ending vaccine, and says he was back to normal after only one day? I’d invest in that news every day!
I held and bought more stock while it was low. It may not be a lot of stock, by most investors’ standards, but by now I’ve acquired 300 shares in the company. And the Phase 2 clinical trial commences just today, and I watched as the stock surges upwards again with this news:
For this woman, watching investors pivot with every little piece of news feels a bit like watching a kid land a little too hard off the playground slide and then goes off wailing to his Mama, looking to be coddled. Except every Mama I know would dust their kids off, give him a smooch on the head, tap his bottom, and tell him to get back on that slide! What they don’t do is race him right off the playground, the minute he takes a bit of a fall.
Then it occurred to me, since most women do not invest, is it fair to say these reactionary investors were mostly men? Perhaps women do make better investors than men, because we are risk averse to losing. Sure, we may not be so quick to invest in the first place, but we likely won’t be so quick to cut our losses and run when things get tough. We don’t know how to lick our wounds; we do everything in our power to prevent them in the first place. Maybe we make better investors because we know how to lead with both our hearts and our heads.
I can’t explain it, and I certainly could be proven wrong on my instincts in the end, but my heart has a huge crush on Moderna. And, I’m willing to take the gamble that good things comes to those that wait.
Investing is not for the weak of heart.
Rule #6: Start small, learn the ropes, gain confidence, and don’t get cocky. But, consider riding the highs and be prepared to take some hard knocks at the lows if you are a long-term investor.
Rule #7: Revenues in our businesses are down due to lockdowns and a global pandemic. Investing at least some of the money we have managed to save before now may be the only way to fully rebound financially. Put your money to work for you.
Tonia Allen Gould