Once LouAnn Lofton of the Motley Fool divined that Warren Buffett seemed distinctly feminine in his investment habits, the cheeky title—Warren Buffett Invests Like a Girl—for her first book fell into place. There’s likely no better foil than one of the world’s richest men to make the point that women naturally know how to invest better than men, if only they would act like men long enough to start investing. The avuncular Buffett obligingly went along with the gag and even posed with author holding the book, which features his smiling face on its cover.
Lofton makes her case convincingly, advising that we all have much to learn about gender trading, Buffett excepted.
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Are you saying women are more likely to have a Buffett-like investment temperament than men?
Your temperament is so important to long-term investment success. Buffett himself has said multiple times that that is the real key. Studies show that women do tend to be naturally suited with a temperament that guarantees long-term investment success. It includes things like not trading as much, not taking as much risk, having a longer term point of view, doing more research and investing in things you truly know and understand and then tend to hold for a long time.
If I had to boil it down, I would say that studies show women really tend to be patient rather than impulsive, realistic rather than overconfident and prudent rather than reckless, all traits that Buffett also has demonstrated over his long investment career.
Are the traits of female investors confined to trading alone or exhibited in other areas?
I definitely think there is some overlap. One thing that is interesting that came up in the research I did for the book is that women tend to be more risk averse than men. And that was something that had been shown in other areas of life.
Did you stand up at a recent news conference and try your title out on Warren Buffett directly?
Yes, I asked him, “Mr. Buffett, do you invest like a girl?” and he said, “You’ll have to read her book to see the criteria she uses, but I’d say I probably plead guilty.”
Yet you say that women are more risk averse than men. Wasn’t that a pretty risky action on your part? He might have squelched you.
Yes, absolutely. Well, you know, sometimes you do have to take a risk and see what happens. I felt pretty sure that he would respond positively to the book. I knew that he had a sense of humor about himself, and I also knew that he would recognize that me saying he invests like a girl was a good thing. He did know the book existed.
If women had held most of the top spots in the financial world, would the financial crisis that began in 2008 never have happened?
I definitely think it would have been muted. I don’t think you can eliminate booms and busts, but I think had more women been in positions of power at the financial companies and on trading floors, their presence alone would have been an alleviating factor in some of the testosterone-driven risk that was being taken on.
How can an investor find a mutual find or a hedge fund or an investment adviser that trades like a girl? Is there a list somewhere?
There’s not a list that I know of. Maybe someone will be inspired by the book to create one.
How about you?
That will be my next project. And I think you’d see some really great performers on that list.
Why do you think women need to read this book?
During their working life, women make less than men do, and then they live longer than men do. So what you are faced with is a situation as a woman, a female, of really having to make do on less money for a longer amount of time. I saw statistics the other day which were really mind-blowing that said by the time a woman reaches the age of 64 the money she will have lost out on adds up to $430,000. That’s the penalty for being born a girl. One day, women will be paid the same level that their male counterparts are, but until that happens it’s incumbent on us to take charge of our finances and address this problem head on.
Aren’t women going to take charge eventually?
It is looking that way.