Do men and women invest differently?  Do they achieve different investment results statistically?  Is one gender more confident than the other in terms of money management?

Not that gender studies is an under-served discipline, but I believe it’s time we take a closer look at gender-based financial behavior.

It turns out there is much that separates the sexes where the dollar is concerned.  Interestingly, there seems to be a disparity between the family balance sheet and the family investment account.  A ShareBuilder Women and Investing study from 2007 found that just over 60% of women manage the household checkbook and 44% – versus only 23% of men – oversee the budget.  However, only 15% of married women take primary care of the family investments, and only 12% of women – versus 21% of men – feel confident about their investment abilities.

Does this “confidence gap” account for better investment returns in portfolios managed by men?  Of course not!

Not surprisingly, female investors do better on a number of levels, in spite of (or because of) the machismo of men on the subject.  Surveys suggest that while men are more likely to chase so-called 5-star mutual funds and the hot stock du jour, women spend almost twice as much time researching before investing, and they have the results to show for it.  Finance professors Brad Barber of UC Davis and Terrance Odean of UC Berkeley recently found that – although women hold less risky portfolios than men – they consistently achieve bigger returns.

Psychologists have long-held that men are more prone to over-confidence, so we might expect them to manage their portfolios more aggressively.  An over-confident investor is far more likely to engage in excessive trading (costs reduce returns), to rely on market timing to guide them (never a good idea) and to shun the advise of an advisor.  (No comment.)

But back to return.  Barber and Odean found that married men trade 45 percent more than married women, yet they earn risk-adjusted returns that are 1.4% lower.  Amongst the unmarried it gets even worse.  Single men trade 67 percent more than single women but earn annual risk-adjusted returns that are 2.3% lower.  Worse still, men in general trade far more than women, turning over 77% of their portfolios each year to 53% for women.  (It seems men and women both need financial advisors.)

Whether or not these findings conform to popular gender stereotypes (men being more competitive; women more collaborative) is a matter of debate.  In any case, if you are working with me take comfort; I am an outlier.

As for other areas of manly over-confidence, I will take the fifth.

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