Dueling Fools
Gender-Specific Investing
April 14, 1999

Gender-Specific Investing Bull's Rebuttal
by Selena Maranjian ([email protected])

You almost convinced me, Yi-Hsin. Almost.

I agree with many of your points. But I take issue with others. For example, you said:

"Books on investing for women may be a great marketing ploy for writers and their publishers, but it's a great disservice to women looking for real investment advice they can use."

If a book marketed to women actually offers solid investment advice, wouldn't it be less objectionable? I certainly am not a proponent of fluffy financial books lacking in substance. But I have no bones to pick with books marketed to certain groups of people.

Consider the entire "... for Dummies" line. Is it wrong for a book such as Golf for Dummies to exist? Or Cooking for Dummies? Sure, there are many other books available on golf and cooking, books supposedly for any reader. But consider that when it comes to some topics, some people feel self-consciously uninformed. By making it clear that the book is for real beginners, many prospective readers are put at ease. (This is the only explanation I can think of for an enormous line of books successfully marketed with a bold and weird "this is for you, you idiot" kind of pitch.)

Women, of course, are not dummies. (At least not any more so than men.) But when it comes to investing, which has traditionally been viewed as more of a male activity, some may feel self-consciously ill informed and may not be confident that they can master the material. For these women (clearly not for women like you, but there are other kinds of women), books and forums that explicitly invite women are effective and useful.

Consider Beth Kobliner's book, Get a Financial Life: Personal Finance in Your Twenties and Thirties. Surely any twenty- or thirty-something person can learn all she needs to learn from a more mainstream investing book. But if this one is effective in drawing the attention of those who might have dismissed investing as not for them (at least not yet), then it has served a good purpose.

I think that your objection may really be to silly and condescending books on investing, in which case I agree with you.

You also said: "In fact, the same rules apply to everyone when it comes to evaluating investments, whether you're talking about an initial public offering, return on invested capital, or same-store sales." True enough. But still, it does appear to be a fact that men and women have different styles of investing. They may tend to think about things like investing in different ways. I'm not suggesting that all women think alike and that all men do. Naturally, we all fall at different points along any continuum.

Interestingly, the National Association of Investors Corp. reports that all-women investment clubs outperform all-men clubs. Some may speculate that this is because women, being less confident, discuss decisions more before making them, doing more research, and treading more carefully. Perhaps some men are more inclined to act quickly on tips they hear.

Finance professors Terrance Odean and Brad Barber found that men tend to be more overconfident and thus, to trade more, resulting in lower returns than those earned by women. The most pronounced difference was between single people: "Single men trade 67% more than single women and earn annual risk-adjusted net returns that are 2.3% less than those earned by single women."

Certainly both groups have things to teach each other. One person (of any gender) can instill confidence, another can model diligent research. A large mixed forum like The Motley Fool offers many opportunities for sharing perspectives between all kinds of people and investors. This is, I'm sure we agree, a good thing.

But at the same time, if some denizens of Fooldom like having a few rooms of their own in which to periodically hang out (sometimes even in mixed company there), I see no problem with that. The world of business, like investing, shouldn't be different for men and women, yet female executives and businesswomen have gatherings (and sometimes support groups) of their own. Politics shouldn't be too gender-specific, yet we've got the League of Women Voters and I'm sure that female congressional representatives gather together now and then, as well.

The world simply isn't yet a place where everything is equal, regardless of gender. Gender-irrelevant books and forums might inform many men and women. But if gender-specific ones will bring in another segment of society -- those who may stay on the sidelines unless offered an explicit invitation -- then what's the harm? As long as the information offered is valid and not patronizing, it's one more means to a common end: a world of Foolish investors.

Next: The Bear Responds