In a recent article from InvestmentNews, October 3, 2016, a study was referenced by Terrance Odean and Brad Barber, two of the fathers of behavioral finance. It highlighted the effects of gender-linked tendencies in trading behavior.
In the study, men traded 45% more than the women. Also single men out-traded their female counterparts by 67%. Both men attributed this greater activity to overconfidence. As a result of overtrading, the average man underperformed the woman by 1.4%. When comparing the single men to single women, the men underperformed by 2.3%!
Even in the professional world, the results were similar. A report from LouAnn Lofton of Motley Fool stated, "Funds managed by women have, since inception, returned an average of 9.06%, compared to just 5.82% averaged by a weighted index of other funds. As if that outperformance weren't impressive enough, the group also found that during the financial panic of 2008, these women-managed funds weren't hurt nearly as severely as the rest of the hedge fund universe, with the funds dropping 9.61% compared to the 19.03% suffered by other funds."
This underscores one of our core principles here at Regal Capital. Trading is not investing. Quick knee-jerk reactions to current market conditions will usually wind up providing less than optimal long-term returns. Investing with a long-term horizon and letting the day-to-day notice pass us by is in our best interest.
You know the saying, "Boys will be boys." Maybe in the investing world, it would do us well to be more like women.