Louann Lofton recently wrote a book, “Warren Buffet Invests Like a Girl” (set for release in late June 2011). This may sound like a weird title, but it’s an idea that I first came across while in business school. The major lesson is profitable investing requires good emotional management, and women tend to do this much better than men. After all, we are taught to manage our emotions beginning as children, most men are just taught not to have emotions at all (my apologies to the men out there that are in touch with themselves, you are the exception). So when stressed gets high, women know how to identify the feelings and put them in their rightful place, while it becomes a jumbled, stressful mess for some of our male counterparts.
How do emotions come in to play in investing? Well, statistics show that men trade more often than women, which is a known unprofitable action. But they still do it. Why? Because trading is stressful and you can become very focused on buying low and selling high and not allow stocks to fully mature such that you can realize the full potential. Hanging on to stocks for a longer period of time is a proven means for realizing more value – you pay less in trading fees, while day-to-day fluctuation can seem volatile, the overall lifecycle of many stocks show increased value over time. Women, more often than not, keep cool heads and wait for the right opportunities in the market, even if that means holding on to a stock that drops in price by a few cents.
If you are a woman thinking about investing outside of your usual 401K savings plan, go for it! As a woman, you totally have the head for it, just ask Warren Buffet. There are some sites geared towards supporting women specifically in their investment endeavors, these include:
I will be picking up Louann’s book next month and will be sure to post a review right here on this blog. Stay Tuned!