I Don’t Believe in Gendered Investment Styles

Not Warren Buffett’s hands.

According to popular commentary, women and men have different investing styles. Women are more cautious and move their money around less. They do more research. Men are more risk-taking and switch investments more regularly. The underlying theme is that women are better at investing, less likely to be overconfident and less rash in their decision-making. There’s even a book called Warren Buffett Invests Like a Girl: And Why You Should Too.

Somehow we’ve ended up with a narrative where women are excellent at investing, which I think is often intended as a way of encouraging more women to invest. Great goal. Yet is this narrative accurate? I suspect not.

Women make up a much smaller percentage of investors and have less money to invest. It seems to me that any group with (on average) less money will (on average) be more cautious. If you have less money to lose, you’d be crazy if you didn’t do more research and take fewer chances.

On the flipside, if you have a whole truckload of money, why not take a few chances? That seems smart. You can afford to kiss the money goodbye if it all goes pear-shaped, and one of them might pay off big-time. That’s how you get those lucky investors who were in early on huge growth stocks and made a fortune – you don’t read about all the other risks those investors took that didn’t pan out.

If we close the gender pay gap and sort out the lack of diversity in business leadership positions, I hope we’ll see this ‘women are amazing investors’ narrative fade away. When women have as much money to invest as men, I suspect many of us will also be risk-taking, overconfident investors. Personally, I would love to take more risks with my money, but I don’t have enough of a buffer to be able to wear the losses.

 Let’s not pretend that women have special investing powers. It’s much more important to focus on working toward getting rid of the gender pay gap and encouraging more diversity in business.