Really?!? Meredith Melnick explains for TIME:
Recently in the Wall Street Journal, MarketWatch columnist David Weidner noted that women “do almost everything better” than men — from politics to corporate management to investing.
Weidner cites a new study by Barclays Wealth and Ledbury Research, which found that women were more likely than men to make money in the market, mostly because they didn’t take as many risks. And why are they risk-averse? Because they’re not as overconfident as men, the study found.
The study’s findings backed up those of previous research on the topic: in a 2001 study [PDF] of 35,000 American households with an account at a discount brokerage, financial scholars Brad Barber and Terrance Odean found that women’s risk-adjusted returns beat men’s by 1% annually. A 2005 study by Merrill Lynch found that 35% of women held an investment too long, compared with 47% of men. More recently, in 2009, a study by the mutual fund company Vanguard involving 2.7 million personal investors concluded that during the recent financial crisis, men were more likely than women to sell shares of stocks at all-time lows, leading to bigger losses among male traders. It also meant fewer gains when some of the stock values began to rise again.
What’s the problem with men? “There’s been a lot of academic research suggesting that men think they know what they’re doing, even when they really don’t know what they’re doing,” John Ameriks, the author of the Vanguard study, told the New York Times.
The reason for that overconfidence may come down to biology, research suggests…
[continues at TIME]
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