Photo Credit: LouAnn Lofton
A family friend, a paunchy retired career Marine, brags that he saw the market crash coming, and so cashed out his investment accounts in mid 2008. “Didn’t lose a penny,” he boasts. “Got it all out.”
What he doesn’t say -- perhaps doesn’t realize -- is that by selling his stock holdings, he did lose money. A huge amount of it.
A lot of other men did too, research shows. Mutual fund powerhouse Vanguard analyzed the movements in 2.7 million of its investors’ IRA accounts during the financial panic of 2008 and 2009, and found that men tended to freak out and sell their stocks, resulting in huge losses. Many missed the market’s recovery as well, as Mr. Retired Marine did. Women investors, on the other hand, were more likely to stay put, hold their ground (and so enjoy the massive bull market of 2009 and 2010).
That’s because, on the whole, female investors are less likely to panic and sell when the market’s crashing around them. Studies conducted by several financial and research institutions show that, but I know it firsthand, too. I remember buying stocks -- Apple, Chipotle and Chesapeake Energy -- the week after the failure of Lehman Brothers, then watching as those same stocks sunk by as much as 38 percent, 33 percent and 71 percent, respectively. And while it’s true that Chesapeake shares are still trading well below what I paid for them in 2008, Apple has doubled and Chipotle has gone up nearly five times in value, from $57 to $247 a share. (Which is really nice, because I never sold.)
I certainly wasn’t the only investor backing up the truck. Among those male investors panicking and selling during the worst of the crisis was one vocal and highly visible exception: Warren Buffett, the world’s greatest investor. “Buy American,” went Buffett’s October 2008 op-ed in The New York Times, “I am.”
Buffett is my idol (that's us, pictured above). I admit it, at the risk of sounding like a geek. I first got to know him when I was 19. My father had died, and I was to inherit a bit of money. Terrified I’d lose this small fortune, I went to a bookstore in Austin, Texas, where I was a college freshman, and I bought the first book on investing that I could find: a biography of Buffett. I’ve been reading about Buffett and following his spectacular career ever since.
Of course I didn’t imagine on that day in the bookstore 17 years ago that I’d ever meet the man himself. Nor did I imagine that when I teased my idol in print -- writing a book called Warren Buffett Invests Like a Girl -- that he’d invite me to brunch in Omaha. But I’d long been aware that Buffett was a man apart… a man not like other men.
What am I suggesting here? I’m suggesting that Warren Buffett has a more feminine temperament, and that it’s served him well as an investor. Like most women, Buffett tends to be cautious and to thoroughly research potential investments. Like most women, he tends to trade less and take less risk. And as we’ve seen, he wasn’t selling during the worst of the financial crisis; he was buying. Buffett’s strengths are women’s strengths, and vice-versa.
But try pointing this out. As reviews of my book roll in, so do these sorts of comments: “Another ridiculously sexist article,” says one commenter. According to another: “My girlfriend's idea of a commodity market is the 50+ pairs of shoes stuffed into our closet."
Despite these -- ahem -- interpretations, all this isn’t some feminist screed or another pointless volley in the battle of the sexes. No, it’s an urgent and highly practical matter.
The financial crisis is now only just past us, and the recovery seems anything but guaranteed. Do we really want the Wall Street crowd -- the very same who helped bring on the crisis -- to go unchanged in composition and behavior? It’s not at all far-fetched to suggest that unless more women head to Wall Street, and unless more men start investing with a more feminine temperament, we are just doomed to repeat the crash we are now emerging from.
I’m not saying the task before us is easy, though. As I watch Mr. Retired Marine chuckle, confident and ignorant in what seems like equal measure, I sense what we women are up against. If this guy is wrong, and he is, he really doesn’t want to hear about it.
If only they could all be like Buffett... and us girls, of course.
LouAnn Lofton is the author of Warren Buffett Invests Like a Girl and Why You Should Too. She hails from Monticello, Mississippi, and from 2005 to 2009 served as editor-in-chief of The Motley Fool.