There has been a variety of research conducted regarding how women differ from men when it comes to investing. According to a study by Barclays Wealth and Ledbury Research in 2011, women do indeed make more money in the stock market.
Over the years, we tend to take fewer risks, do more research before we invest, and we tend to buy and hold. However, there’s a strange parallel that I’ve observed over the past few months while playing free Texas Hold’em at a local bar/restaurant: women make better poker players too.
Women Are More Risk Adverse and Less Impulsive
According to LouAnn Lofton, author of Warren Buffett Invests Like a Girl — And Why You Should, Too, “Women spend more time researching their investment choices, tend to take less risk than men do, and hold onto their investments longer. Women are also more likely to seek out information that challenges their assumptions.” In my completely unscientific observations, this has translated to the poker tables too. However, I didn’t notice this right away, it was George, the person who administers the Texas Hold’em game that I attend, who first pointed it out to me.
My conversation with George went like this: one night we were talking about how men always outnumber the women poker players. At this particular place, it’s usually about 80% men and 20% women at the start of the game, but he pointed out, that at the final table it’s usually closer to 50/50. Sure enough, week after week, I’ve noticed the same thing: ladies keep making it to the final table and often make up half the poker players at the final table.
Confidence or Over-Confidence
Lately, people have been telling me that I’m a better Texas Hold’em player than other men we play with, because I make it to the final table more often than they do.
The thing is: we play COMPLETELY differently. They’re much more aggressive poker players than I am. They’re more likely to raise pre-flop, they make huge bets when they have a good hand, and they’re more likely to win big or lose big. I am a much tighter player. I fold a lot of hands and I only play cards that I feel confident playing. When I’m in a hand, I think of all the combinations that could beat my hand, and I usually assume one of the other players has a better hand than me.
Patience Is a Virtue
The guys have a “go big or go home” mentally when it comes to poker and my goal is to make it to the final table. I know that if I play conservatively, most of the dudes will knock each other out before getting to the final table. How does this relate to investing? Men are much more likely to chase “hot stocks” because they want the big win. They want to be able to brag to their neighbor, boss, brother-in-law, etc. “I bought Apple when it was at $20 a share!” Patience is important when it comes to investing as well. I’ve noticed that my female clients tend be more interested in long-term growth rather than chasing the next hot stock. Women are more guided by a plan and are more likely to stick with the plan long term. This patience usually pays off in the long run.
What Can We Learn From This?
Regardless of gender, there are a few key takeaways: invest for the long haul, don’t chase hot stocks, and have a plan. Find a financial planner who does comprehensive financial planning and isn’t just an investment advisor. Investing is only one piece of the pie and not the whole pie. Once you have an asset allocation that meets your time horizon and risk tolerance, make sure you (or your advisor) rebalance your portfolio each year.
Lesson: watch out for the ladies at poker, because we will probably take you down at the final table. Just like Loni Harwood did when she won a gold bracelet at the 2013 World Series of Poker. Oh, and she earned a business degree in 2012 with a major in Finance.