How Men’s Overconfidence Hurts Them as Investors - NYTIMES

[jwkde]

How Men’s Overconfidence Hurts Them as Investors - NYTimes.com

 

[W2R]

But during the financial crisis, the Vanguard study showed, men were more likely than women to trade — and to do so at the wrong times.

Women have also been shown to be more risk-averse than men. In portfolio selection, women tend to have a greater preference for fixed-income investments. That could cause their portfolio returns to lag over the long run, assuming that stocks outperform bonds — though in a shaky market like the one of the last decade, this greater caution might be beneficial.

It sounds to me like what they are saying, is that men are more likely to overestimate their risk tolerance, and women are more likely to underestimate theirs. Perhaps the best thing for married couples to do is to cooperate in developing an investing strategy.

 

[Spanky]

It sounds to me like what they are saying, is that men are more likely to overestimate their risk tolerance, and women are more likely to underestimate theirs. Perhaps the best thing for married couples to do is to cooperate in developing an investing strategy.

This is called risk tolerance balancing.

 

[Onward]

IMO the ultimate trait of a good investor is humility. That's not high on the list of traits that our culture associates with "successful" men. What makes us good in business and sports is exactly what makes us lousy in investing. It's a zen kind of thing that I'm thankful for, since I suck at business, and I'm no great athlete.

 

[chinaco]

It sounds to me like what they are saying, is that men are more likely to overestimate their risk tolerance, and women are more likely to underestimate theirs. ...

IMO - Most people do not really understand the components of risk and what they really mean.

For example, I know some people approaching retirement age that had too much invested in a few individual stocks. Those companies did not go out of business, but they took a major haircut and if history is any indication, it will take 5 - 7 years for the valuation to fully recover.

Lack of decent diversification is the biggest issue I regularly see amongst average retirement investors. Then when the market tanks, they close their positions and move assets to bonds (try to time). Or they ride their postions all the way down.

The other issue seems to be where people try to continue using their accumulation phase investment strategy when approaching (or in) the decumulation phase.

 

[Whisper9999]

Of course, one interesting aspect of this article is the fact that, imo, most couples should come up with a mutual agreed upon philosophy and work together. So potentially you could combine the best of both worlds, eh?

 

[unclemick]

Of course, one interesting aspect of this article is the fact that, imo, most couples should come up with a mutual agreed upon philosophy and work together. So potentially you could combine the best of both worlds, eh?

Yep - plus the investment return almost always beats -divorce.

Right?

heh heh heh -

 

[shotgunner]

Sorry I can't resist.

Our testosterone works to our disadvantage when it comes to investing. Ok so be it, I like the convenient plumbing that essentially makes the world my urinal

 

[Leonidas]

The testosterone can work to one's disadvantage in other endeavors as well. One of the best golf lessons I ever learned was from my wife, on when to not overestimate one's ability (and the factor of luck) when it came to risky shots. I will still play some risky shots, but now, before I commit to trying to get over the 30' tree directly in my path, I pause to consider the alternative shots as well. I try to remember that the objective is to keep the ball in play in the fairway, and that risky moves have real potential to find me in the water or O.B.

That lesson has been carried over into other things I do in my life, especially investing. I try not to be more optimistic in estimating the odds of reward for risky moves. No more dreaming of being the hero who knocks down a ten-bagger with everything I buy. My investing risk failures come more often not on the initial purchases, or even selling the occasional bad call, but I have often been guilty on hanging on to a winning position for too long.

 

[bbbamI]

Well, there does have to be a difference in men and women...otherwise it wouldn't be any fun....

 

[ERD50]

IMO - Most people do not really understand the components of risk and what they really mean.

Yes, and I find the most common one being not understanding the 'risk' of not taking enough risk. IOW, an over-weight in 'safe' investments that are practically guaranteed to lose buying power. I cannot afford that kind of 'risk'.

-ERD50

 

[freebird5825]

Well, there does have to be a difference in men and women...otherwise it wouldn't be any fun....

I was asleep in health class that day.
I wonder if Dr Rich could give us a quick refresher class if we asked REALLLLLLLY nicely and smiled .

 

[Meadbh]

Not Dr. Rich, but....

As a baby doctor, I have been asked some strange questions. Once, the father of twins (one girl, one boy) asked me if they were identical.

 

[Orchidflower]

I can tell you from being in sales over 30 years that women are often much better at being thieves. When a man is going to try and scam you out of money--IF you are watching--they drop so many red flags normally you can tell; but, women....you don't expect it from the women, so you drop your guard and don't see it coming. And there are some real scammer-ladies out there, too. I pity you guys.
No wonder the gypsy tribes use the women to be the money earners. Those gypsys aren't stupid.

Leonidas could probably shed tons of light on this particular subject.

 

[clifp]

Not Dr. Rich, but....

As a baby doctor, I have been asked some strange questions. Once, the father of twins (one girl, one boy) asked me if they were identical.

So what did you tell him?
Do they train you at medical school not to laugh at patients silly questions?

 

[Meadbh]

So what did you tell him?

I said there was this one little thing....had he changed their diapers yet?

Do they train you at medical school not to laugh at patients silly questions?

Yeah, you have to keep a straight face and look respectful: they call it "professionalism".....but it makes for good stories in the cafeteria afterwards.....

 

[clifp]

Of course, gender generalizations must be taken with caution: they clearly don’t apply to all men or all women. “The differences among women and the differences among men are much greater than the differences between men and women,” he said.

I am surprised that this actually made it into a newspaper, in the search for sensationalizing a story the media tends to forget this important caveat.

Gender differences appear to extend to other financial behavior. For example, women who are C.E.O.’s and company directors tend to pay a lower premium in corporate takeovers, saving their shareholders a bundle, according to a 2008 study of mergers and acquisitions by Maurice D. Levi, Kai Li and Feng Zhang of the University of British Columbia. ]

I briefly skimmed this report looks pretty comprehensive. It does make wonder about Kraft's CEO Irene Rosenfeld, she got Warren Buffett pissed off enough to publicly complain about her acquisition of Cadbury several times before the deal went through. He then wrote a parable in the annual letter about CEO who overpay for companies.
Perhaps there is some gender confusion here

 

[clifp]

I said there was this one little thing....had he changed their diapers yet?



Yeah, you have to keep a straight face and look respectful: they call it "professionalism".....but it makes for good stories in the cafeteria afterwards.....

Ya but sometimes you guys take it too far...

A few months ago, at her children's insistence, I took my mom to a gerontologist for an evaluation. The Jamaican Dr had an accent, was very soft spoken, and my 83 year old mom wears hearing aids. Needless to say this made communication difficult ,since even I was having trouble hearing him. We had asked him to speak up or repeat something at least six times.

We were discussing her incontinence, and the Dr suggested that mom she see a specialist who could help her with "coping strategies such as anticipatory voiding" . It took me a few seconds to figure out what that meant, and mom looked confused. So I said, "Oh you meaning peeing before she needs to"
Well yes, he said.

Man and I thought I was bad about complicating stuff unnecessarily.

 

[REWahoo]

We were discussing her incontinence, and the Dr suggested that mom she see a specialist who could help her with "coping strategies such as anticipatory voiding" . It took me a few seconds to figure out what that meant, and mom looked confused. So I said, "Oh you meaning peeing before she needs to"
Well yes, he said.

Man and I thought I was bad about complicating stuff unnecessarily.

Yep.

Reminds me of the trip we took to London 30 years ago when DW (a native of CO and TX) developed a bladder infection. No problem at all hearing or understanding the accent of the doctor she saw, but there was a little problem in communication when he handed her a specimen cup and asked her to spend a penny...

 

[Leonidas]

Leonidas could probably shed tons of light on this particular subject.

I always thought it was one of those macho-dominated society things. The guys do plenty of stealing and scamming, but compared to their women folk it's like a hobby or something.

... but there was a little problem in communication when he handed her a specimen cup and asked her to spend a penny...

And then they have 20 variations of the word "piss" to mean everything except urination.

 

[brewer12345]

Well, there does have to be a difference in men and women...otherwise it wouldn't be any fun....

Try explaining that to the gay community.

 

[bbbamI]

Try explaining that to the gay community.

My best friend is gay and the differences between he and I are why we've been best friends for over 20 years.

 

[Orchidflower]

I always thought it was one of those macho-dominated society things. The guys do plenty of stealing and scamming, but compared to their women folk it's like a hobby or something.

And then they have 20 variations of the word "piss" to mean everything except urination.

In gypsy culture, I think it's a matriarchal society. You know, the Golden Rule: She who has the gold, rules.

 

[Nords]

... but there was a little problem in communication when he handed her a specimen cup and asked her to spend a penny...

At least he didn't ask her to "shoot a Yankee"...

 

[DeborahB]

LOL - my male S.O. has far less risk tolerance than I do - really, almost none.

So his money isn't growing and mine is. I keep nagging him but although he is really smart and understands the whole thing, good at the math etc., he keeps wanting total security. Nice, but no longer a good bet. So he makes 2-3% on his money and frets, and I make 5% and up, and just watch it carefully.

There always have to be outliers to make the average work