Are Women Better Traders Than Men?
The recent resignation of female JPM executive Ina Drew prompted Belsky to write this article suggesting more female traders should exist not just for the sake of equality, but because women are in fact better than men at the job.
trading reduced their net returns by 2.65 percentage points a year, compared to 1.72 percentage points for women. Put another way: Men were on average worse stock traders than women.For their 2001 study, the distinguished behavioral economists Terrence Odean and Brad Barber analyzed account data for more 35,000 households at a large discount brokerage, looking at the common stock investments of men and women from February 1991 through January 1997. Their top-line discoveries: Men on average traded 45% more frequently than women, and that hyperactive
Do you think women make better traders than men? As a guy, I'm inclined to defend my gender and say no. Here are 5 reasons why Belsky says yes:
- They're quicker to admit ignorance.
- They're more likely to seek help and advice from others.
- They're better at specific goal-setting.
- They do more "homework."
- They're generally more cautious about risk.
Belsky asserts that male traders are less profitable because they are overconfident. Yet I would argue that while an excess of confidence can mislead investors, an absence of it could cause traders to pass up high-reward opportunities. Trading also requires quick decision making, which requires a certain level of confidence. I'll admit my reaction is a little biased. But declaring outright that women are better traders than men? That's a bold statement.
Has anyone actually noticed these stereotypes? Would you feel more or less confident if your money was being traded by a woman?