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Why women investors outperform men in the long run: trader

When it comes to investing, women tend to outperform men over time, according to several studies.

"We're wired differently. Women have strong activity in planning and self-control. I think that lends themselves to be better traders," says Kathy Donnelly, proprietary trader and co-author of "The Lifecycle Trade."

Donnelly cites a 2017 Fidelity Investments study that concluded women earn higher returns than men when investing — to the tune of 40 basis points, or 0.4% — and that women save more. Over time, these small differences add up, notes Fidelity.

Of the findings, Donnelly says, "[The study] basically tied to trading less, saving more and willing to learn — I think that fits me to a T."


A separate study in the U.K. found that men outperform the country's benchmark FTSE 100 (^FTSE) index by 0.14%, but women tend to beat it by 1.94% — a difference of 1.8 percentage points. Warwick Business School conducted the study with the assistance of Barclays and found that men trade more often than women — 13 times per year versus nine times over the same period.

The Warwick study also found men are more likely to take profits on winning trades while holding onto the losers — concluding that female investors tend to avoid "lottery style" speculation. Men are more likely to buy lower-priced shares, which helps explain the modern meme stock phenomenon. Many of the targeted stocks like GameStop (GME) and AMC Entertainment (AMC) are considered to be penny stocks (or at least they used to be when they traded at lower prices).

A Nasdaq report adds: "Generally speaking, women are more patient and allow their investments to grow. This is important because frequently trading and acting on short term fluctuations cultivate negative outcomes. In this regard, men could borrow a page from women."

When asked about her experience as a female investor, Alissa Coram, multimedia content editor at Investor’s Business Daily, says, "I think that the market doesn't really care what I look like, where I'm from, my age. I look at it as being optimistic ... [T]here are endless opportunities out there, as long as you have a great set of rules and strategies that you are abiding by when you're investing, and making sure you don't blow up your account. I think that the opportunity out there is for everyone, and that females out there should just go for it, and not let stereotypes of Wall Street or the financial world get in their way."

Trading in stocks has historically been male-dominated, but there are signs that cryptocurrencies are helping to disrupt that hegemony. Robinhood recently reported that among its customers, the number of female crypto traders has grown seven-fold this year — with 40% of their active women customers trading in crypto assets, such as bitcoin (BTC-USD), ethereum (ETH-USD) and dogecoin (DOGE-USD). “These figures are encouraging and prove that crypto can be a powerful tool in decentralizing power in finance," Robinhood says.

Donnelly wraps it all up, saying, "It’s all in the brain: Men are on a mission, women are on a journey."

Jared Blikre is a correspondent focused on the markets or Yahoo Finance Live. Follow him @SPYJared