Run like a girl. Throw like a girl. Cry like a girl. All of these expressions have permeated our language – none necessarily meant as a compliment.
But “Invest like a girl,” could be a woman’s payback – both literally and figuratively – for all of the negative interpretations of what “like a girl” means.
I know you’re thinking there’s no such thing, no such expression.
But there should be. Warren Buffett does. And arguably, if one of the greatest investors of our time “invests like a girl,” there’s got to be something to it.
Ironic, isn’t it? When the entire financial industry seems to spend millions a year studying the investment habits of women, only to conclude – and proclaim – what terrible investors we are. Then they produce “studies” to demonstrate how much women “hate” investing. How we know nothing about it. How we’re scared to save and invest. How we don’t believe in our own abilities. Translation: “Call me and I can help you!”
Interesting. I’m not saying these studies were necessarily faked to achieve the desired outcome. But I can’t help but think the authenticity of said studies are kind of like women’s orgasms: one can never be totally certain.
I digress. There are tomes of information written about Buffett and his investing style. Even if you haven’t read one word of the many books about him, you undoubtedly have heard of him. You know that he’s rich – the third richest person in the world, to be precise. And you probably even know he became a self-made billionaire by being one of the best investors of all-time.
There are many elements to Buffett’s tactical approach to investing. Here’s a helpful overview.
However, in addition to Buffett’s tactical approach, following are the basics of his mindset:
1. He invests in companies that he knows and understands.
2. He doesn’t see investing as a gamble. He’s in it for the long-term.
3. He does NOT take some day trading approach – sitting around all day buying, selling, risk-taking and frantically trying to beat the market.
4. He considers the management of a company, asking questions like, “Is the management strong, wise, experienced?”
5. Perhaps most importantly, he controls his emotions. They way Buffett invests is directly related to his temperament. He has been quoted as saying, “It’s your temperament, not intellect, that makes you a great long-term investor.” Buffett is a cool cat – remaining steady in the most critical of times.
Does any of this sound familiar? It should. Guess who else shares this mindset? Women. In fact, women are not only known to invest in the very same way Buffett does, we live our lives by the same mindset.
I’m not the first one to notice the similarities. Financial writer, LouAnn Lofton, recently pointed this out in a book she released last year titled, “Warren Buffett Invests Like a Girl,” after she noted the latest research about men, women and investing – particularly when it comes to controlling emotions, and egos. Women are better at it then men. You know this is true. We ask for directions when we’re driving.
Just like Buffett, women need to understand things. We’re less likely to gamble – especially with money we know we need for our kids and families. We have neither the time nor desire to constantly buy, sell or even deal with the ups and downs of the market. We focus on what needs to get done – and do it. And when it comes to important things, especially investing, women are far less emotional – and ego-driven, than men.
While some of that may be a bit hard for you to believe, it is true. Not only do we share the same mindset Buffett applies to his investing — we are practiced at applying that mindset, in our daily lives.
Let’s think about this mindset in a different context. Let’s say your child needs to have a serious operation. Women do every bit of research possible. We’re not going to gamble on this – it’s far too important. We interview every doctor, hospital. Decide which is the best and trust that doctor to do his/her job. We focus on what needs to get done, and do it. And as far as emotions go, sure, we may cry, scream or even breakdown behind closed doors, but who is standing there remaining calm and collected in front of her child – during the critical time when it matters most? Who knows — and can 100% guarantee — that she’ll stay by her child’s side, even if – and especially if – the going gets rough.
You got it.
Ladies, by no means am I comparing raising a child to investing, even though the same principles really do apply: you have to learn a heck of a lot and make some investments (especially in the beginning), keep learning as you go, and stick with it through the ups and downs. The good news is: we are genetically programmed to do both well.
So, what’s the problem, you may ask? If women are hard-wired to invest like one of the best investors in the world, why don’t we? Why are so many women not investing, or struggling financially – particularly later in life when they face retirement? Good questions.
My opinion is that women’s lack of investing comes down to three things: “perceived” lack of money, lack of knowledge, and/or lack of time.
In my next post, we will address the lack of money. We will share ideas about how to find or make more money – whether you’re already employed, or not.
As far as knowledge and time goes, I think this is where we get really stuck. Women wonder who should help us and how? But, unlike parenting, we don’t talk a lot about this among ourselves, or with our friends – so we get stuck, and we stay stuck. Promising ourselves we’ll think about investing tomorrow.
I know I’ve been rattling on about Baton Investing lately, but I really do love the company’s approach. Also, it’s entire model and algorithm is based on Buffett’s sane approach. That squares with me. What’s more, because it’s a system based on timeless and proven principles, all of the emotion is taken completely out of the system’s recommended trades. This certainly can’t be said for financial advisors, money managers or traders. Those are people, and people have emotions. Big emotions which can impact the stock market in big ways. Remember the 2008 stock market crash? The one where you likely lost a a good portion of your retirement? That crash was primarily caused by macroeconomic factors – specifically the housing bubble – and especially punished emotional investors who failed to recognize how overheated the economy had become. As a result, they paid way too much for overpriced stocks. (It’s a little similar to how women stood hours in line for the Lily Pulitzer items at Target, and are now paying twice the price for the items on ebay.) The point is emotions got the best of many. And we all paid the price for it.
But the truth is, while I (and many women) may share Buffett’s mindset, I am by no means a financial guru. In addition, and as I said, I don’t have enough knowledge or time to research the finer points of companies, and analyze what makes them a good investment. Baton analyzes that information for me and presents its recommendations to me. If I agree, I execute the trade – a few clicks and I’m done. Baton’s recommendations are not right all the time – no one is right all the time. But that doesn’t matter to me. Of course I want to make money. But like Buffett, I am in it for the long-term. I know if I stick to a system that works, it will be worthwhile. And using Warren Buffett’s principles, the Baton system has beaten the market by 300% over the last 12 years. To put it real terms: had I invested $100,000 in Baton‘s stock portfolio in 2003, I would have made $285,535 more than had I invested the same amount in the S&P 500 index. As it is, I’ve only been using it for a few months, but to say I’m happy is an understatement. So now you understand why I rattle on about Baton. And why I want you to check it out too.
Until then, be proud of the fact that you invest like a girl. And if you don’t invest right now, feel confident in the fact that when you start (not if, when), the way you are already programmed to think is a true advantage for you.
Just ask Warren Buffett.
Patty McDonough Kennedy is CEO of Kennedy Spencer (www.kennedyspencer.net) a marketing communication company. She splits her time between New York and Vienna, Austria, and works with companies and individuals across the world to develop effective programs that measurably improve results. In her blog ((Laugh Lines)), she writes about the funny, fabulous and messy mix of business, parenting, life & money.
Note: Patty doesn’t write about or promote products or services that she hasn’t personally used – and likes. She does accept contributions – stories, pictures, etc, from others, if she thinks they will help inspire or empower women.