Over the years, the sales rack at Amazon (AMZN) has said that you should think like a man, date like a man, play like a man. Simultaneously, it's said you should win like a woman, act like a lady, fight like a girl. But who should you invest like? Although women investors -- on average, at least in one large and oft-cited study -- outperform male investors due to the fact that they trade less frequently, the answer, experts say, is both. Both men and women have strengths you'd want to appropriate for your portfolio.

Here are a few things your spouse, partner, friend, brother or sister can teach you:

If you're a man:
  • Diffidence. Terrance Odean and Brad Barber, both professors of finance at the University of California, completed a study in 2001 called "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment." The title says it all: Men, in general, tend to be a bit too surefooted when it comes to investing. "We found that men traded more actively than women, and so attributed that, at least in part, to overconfidence, being too sure of themselves in terms of stock picking and too willing to trade on perhaps too little information," explains Odean.
  • Perspective. Keep in mind that these days, the average investor who trades actively is in competition with professional investors who have more experience and better information. It's very difficult to win.
If you're a woman:
  • Take more risk. That's right – men may be taking too much risk, women too little. The key, of course, is to strike a balance. Odean says there is evidence that women tend to invest less in equities, likely because we're a bit more risk adverse. But equities are a key part of your portfolio. They are a primary contributor of growth, which will help you hedge against inflation and earn more money.
  • Understand asset allocation. Even if you're knocking on retirement – or in retirement, for that matter – you need stocks in your portfolio. A good rule of thumb is to subtract your age from 100. The answer is the percentage of your portfolio you should have in equities: If you're 40, that's 60%. "I don't know what the magic number is, but I do know it isn't zero," says Odean. "And so I think a lot of women would benefit from being a bit more aggressive in their overall portfolio, in terms of asset allocation, but not in terms of trading."
Finally, both genders should understand that they key to investing is really consistency. If you get the right asset allocation, diversify, double check that you're on track on a regular basis, and then set up automatic contributions each month, you'll come out on top. "In our sample, neither men nor women profited from active trading. It's not like women made good picks and men made bad picks – both didn't make good picks, but men made more picks. It's not a great analogy, but it's a little bit like roulette: Neither men nor women tend to win, but whoever places more bets loses more," explains Odean.

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17 Comments

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N68Firebird

It doesn't matter if a person is a man or a woman, so long as they follow a decent PLAN for trading!

January 24 2011 at 5:40 PM Report abuse rate up rate down Reply
N68Firebird

You have to define both your entry and exit strategies BEFORE you trade - and stick with your plan. Even a bad strategy is better than no strategy at all. Get something going, and fine-tune it as you go along. I have my money with Tradestation, and they have a simulator. I'm sure other firms have similar software, but I like theirs the best.

January 24 2011 at 5:39 PM Report abuse rate up rate down Reply
ourearthlyangels

One reply was pretty close: invest in what is going up! It's an axiom in investing "The trend is your friend". Getting 'in' at the end of a rising trend and feeling panic and selling at lows si a classic poor response. Pro investors (not brokers who make money off what they steer you to) track trends and get in as the trend is upward and take profits when the trend is near the top. They don't try to be greedy about it and do not let their emotions keep them in a holding that fails to perform.

January 24 2011 at 3:56 PM Report abuse rate up rate down Reply
clindroth

The seismic changes in recent years in how Wall Street trades stocks have necessitated changes in how Main Street investors should now invest their savings and retirement funds. See www.mainstreetinvesting.biz. I would be interested in your take on my observations and solutions. Cliff Lindroth, San Diego, CA

January 24 2011 at 3:55 PM Report abuse rate up rate down Reply
exportermagazine

Are we still debating this crap! Are not men and women receiving the same information through the various liberal and socialist loving business media outlets(like AOL Financial). So we can all basically suck at investing. furthermore, socialist don't give a crap whether your a man or women. In the end, they want your treasure.

January 24 2011 at 2:58 PM Report abuse rate up rate down Reply
wsjalerts13

So where are the numbers/study coming from ? Any place that we can look at ?

January 24 2011 at 10:53 AM Report abuse +1 rate up rate down Reply
Artie

Both men and women in this country for the most part are uneducated when it comes to investing and are subjected by a barrage of confusing BS that is out there. It becomes a case of analysis paralysis for many people. If you can't watch the market everyday or don't want to, get yourself a good advisor or educate yourself. Better yet, you can do both. There are a lot of investment tools and information available out there these days for individual investors. Trading constantly in and out of the market is for "wise guys" and gamblers. It's not for most people. The better bet is to buy quality stocks that you are familiar with and hold them. Don't try to be a market timer. No one has a chrystal ball. Do some of your own research and don't completely rely on others. See what other pro's are investing in. Also, dollar cost and average and pay yourself first. Investing on a consistent basis weather weekly, bi-weekly, or monthly is the way to go. Diversify across a broad range of securities. IF you can't afford or don't want to pick your own diversified investment portfolio of individual stocks (and bonds) buy mutual funds or ETF's especially ones that track broad indexes like the S&P 500. Most of the stock pickers out there only tell you about their successes and not their failures. Be patient and don't swing for the fences.

January 24 2011 at 10:43 AM Report abuse rate up rate down Reply
falconsso

DID you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home etc. When did this happen? It's in the healthcare bill. Just thought you should know.
SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)
REAL ESTATE SALES TAX
So, this is "change you can believe in"?
Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Does this stuff make your November and 2012 vote more important?
Oh, you weren't aware this was in the obama-care bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either

January 23 2011 at 8:59 PM Report abuse +4 rate up rate down Reply
savemycountry911

Actually studies show that a monkey can pick stocks as well as the professionals.

January 23 2011 at 8:20 PM Report abuse +4 rate up rate down Reply
2 replies to savemycountry911's comment
bigpapapuff425

The monkeys made more money per investment.

January 24 2011 at 12:21 AM Report abuse +2 rate up rate down Reply
gvsu93

Exactly! The statement that professional investors beat individual investors with their experience and better information is completely false. The Wall Street Journal has shown that monkeys can pick stocks as well as a professional investor. If you check the returns of "professionals" with their better info, you find most (80% on the last study I saw) cant even stay even with the index they are trying to track. Stockbrokers are worthless, are out to collect management fees and trading commissions. Do an article on that.

January 24 2011 at 6:55 AM Report abuse +2 rate up rate down Reply
joejteacher951

This is a ridiculous topic! Women invest mens money! 80% percent of it!

January 23 2011 at 4:47 PM Report abuse +1 rate up rate down Reply
1 reply to joejteacher951's comment
dbatt911

True. My father invested money for my mother , my siblings and me. I invested money for my wife and kids. Just because it is in her name doesn't mean she invested it. A man invest money in safe places for the family for education and other things. Somebody said social science isn't science. They are right. If your conclusions are a matter of opinion and not concrete then it is not science. In science you mix this with that note the temperature in the room and other important factors based on proven experiments. Social science is junk science.

January 23 2011 at 10:25 PM Report abuse +1 rate up rate down Reply