Women have what it takes to win shares game
When I think back to my greatest investment failures, I'm struck by the parallels: with a natural overconfidence, I took excessive risks, investing too much money in speculative stocks; I panicked when things went against me, often selling out at the worst possible time; and I traded too often, trying to correct for rash decisions.
I learnt from my mistakes but many women don't need to; they inherently understand them. Jennifer Lerner of Harvard University has examined the effects of emotion in decision-making. Men are overconfident. Check. When faced with a crisis, we are driven by anger. Check. That gives us certainty - confidence that our assessment of a situation is correct, which then encourages action. Check.
Women tend to make decisions more fearfully. With incomplete information, they are less prone to act. While men appear happy to take on more risk, often foolishly so, women are inherently more conservative.
How do these differences play out in real-life investing? Men tend to trade more often, turning over their portfolios more quickly than women; in the midst of a market downturn, they are also more likely to sell, but in a boom more likely to buy in; and they quickly reverse buy and sell decisions.
Research supports these findings. In a study titled Equity Abandonment in 2008-2009, mutual fund manager Vanguard found that men were more likely than women to sell their shares at sharemarket lows during the 2008-09 financial crisis.
A 2001 University of California study revealed that men traded 45 per cent more than women and that this reduced men's net returns by 2.65 per cent a year compared with 1.72 per cent for women.
So men are more predisposed than women to sell low and buy high, and pay more in trading costs along the way, while women take a longer-term, more risk-averse perspective than men. Generally, that is a better recipe for investing. And yet investing remains a predominantly male activity.
For women, that is a huge lost opportunity. To them I say: the risk aversion that stops you from investing in the sharemarket in the first place is the very thing that will make you a good investor - go for it! To the men: if you want to benefit from greater diversification, lower trading costs, less risk and higher overall returns, get your partner involved in managing your portfolio.
This article contains general investment advice only (under AFSL 282288). John Addis is the research director at Intelligent Investor Share Advisor, shares.intelligentinvestor.com.au.
Frequently Asked Questions about this Article…
The article explains women tend to be more risk‑averse, trade less, and take a longer‑term view. That lower turnover and reduced panic selling during downturns often translates into lower trading costs and better net returns compared with men who trade more frequently.
Research cited in the article (including work by Jennifer Lerner at Harvard) finds men are more overconfident and driven by anger in a crisis, which encourages action and frequent trading. Women are more cautious with incomplete information and less likely to act impulsively — a tendency that can help avoid buying high and selling low.
Vanguard’s study titled 'Equity Abandonment in 2008-2009' found men were more likely than women to sell their shares at sharemarket lows during the financial crisis, meaning they tended to lock in losses at the worst time.
A 2001 University of California study cited in the article showed men traded 45% more than women. That extra trading reduced men’s net returns by about 2.65% a year versus 1.72% for women, illustrating the cost of overtrading.
No — the article encourages risk‑averse women to invest. It argues that the same caution that makes women hesitant to invest can actually produce better investment outcomes over time, so getting started in the sharemarket is a worthwhile opportunity.
The article suggests men can benefit from greater diversification, cutting back on frequent trading, avoiding panic selling, and even involving a partner in portfolio management. These steps can lower trading costs, reduce risk and potentially improve long‑term returns.
The article is written by John Addis, research director at Intelligent Investor Share Advisor. It states the content is general investment advice only and is provided under AFSL 282288, not personalised financial advice.
Because the article shows women’s more cautious, low‑turnover approach tends to produce better outcomes, the fact that fewer women invest means many are missing the chance to benefit from long‑term sharemarket returns. The author urges women to get involved and take advantage of that opportunity.
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