A study conducted by Terrance Odean and Brad Barber at the University of California found that although men trade 45% more often than women, their average annual risk-adjusted returns are 1.4% smaller per annum. Therefore women make better investors than men.
So why is there still a male-domination in the investing industry more than in any other industries?
The main argument would be that psychological factors are more important than biochemical ones. Faced with a problem, any problem, not just financial uncertainty — men generally like to do something about it, to take action. Women, on the other hand, often just want to talk about it first. They want support and reassurance.
There are important lessons that men can learn from these various studies. Yes, there are times when it’s very hard not to react to what’s happening in the markets or the economy. But almost invariably, for those who have the right financial plan in place, the best course of action is to do nothing.
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