This question first came to me while I was thinking of another blog that I intend to (hopefully) complete one day, the basis of which was about having emotional control while investing. I began to think about how backwards the thinking is for the majority of investors out there and about an ex-girlfriend of mine (keep your pants on fellaâ€™s it was PG) when it dawned on me that I had something great to write about here. Letâ€™s explore this question further shall we?
What is the thinking for the majority of investors out there? As I come to see it, the majority of people buy while the market is going up and sell while the market is going down. They are drawn in by the lure of increasing prices and get frightened should their stock go through any sort of decline. This is also especially true of the technical trader, who often times will buy as the market is advancing, as their â€œmagic formulaâ€ shows that the stock price is advancing upwards, hoping that the climb will continue up to the peak of financial independence. And if the market declines? Well abandon ship! â€œSELL! SELL! SELL!â€ they will yell, hoping to retain as much of their hard earned principle as possible so they can start buying as the market turns, bringing with it another perilous journey up the slopes of a monetary Mount Everest. But enough about the market, letâ€™s talk about girls.
The one thing you should know about my ex is that she loved to shop. Almost every day we hung out she would tell me that she bought some new earring or bathing suit or a new pair of shoes or a purse or some lip gloss or new sunglasses or a new bra or a ring or some glitter or a necklace. Personally I am terrified about spending my money on such frivolous things, and I still wonder why she bought all the things that she did, but her rational for buying those items rings true to me to this very day.
They were on sale.
Imagine if the whole of the investment community took this ideology to heart, what a world we would live in! Instead of newscasters saying that the market took a beating today they would rejoice! â€œStocks are becoming more attractive yet again today as the S&P dropped another 3% on heavy volume â€“ the second day in a row that stocks have gotten cheaper! Mining investors faired even better, with leading companies like Goldcorp losing 5% on the day, making its price even more affordable! And some prominent analysts are optimistic that the stock price will continue to drop in the upcoming weeks and months.â€ They would go on like this, all the while having a large sign with bold letters reading â€œSALE! 30% OFFâ€ hanging above their heads.
Now Iâ€™m not saying you canâ€™t make money by buying high and selling low (although I do think it would be extremely difficult) I just donâ€™t see the logic in it, as even fools can win the lottery. All Iâ€™m saying is that the justification for buying high and selling low doesnâ€™t make financial sense and that the average investor (and you technical traders out there) should be careful should you continue along this path and have fears of losing your principle.
What DOES make sense is this: â€œBuy low, sell high.â€ This statement is both simple and logical. And should the market decline, well then itâ€™s time to buy more of course, not sell off at a discount!
So this brings us back to our original question: Are women better investors than the average trader?
The answer is,