In my last column, we looked at ideas and research from LouAnn Lofton's new book, Warren Buffett Invests Like a Girl: And Why You Should, Too. Ms. Lofton believes that women have it within themselves to be great investors. She also says that the average women, just like Warren Buffett, makes a better investor than the average man.
Many, many readers commented on this column and as with any good discussion, opinions were varied. One reader wanted to know why, if women are such great investors, the author uses a man to make her point. While others said it didn't matter much because women don't really invest their money. It is true that most great investors on record are men. As one reader pointed out, there's not one on Investopedia's list of " The Greatest Investors." When successful female investors are mentioned, their names are less recognizable than their male counterparts.
Studies suggest that while females outshine men in investing, there are still less women than men on the trading floors and managing the investments at home. A recent Bloomberg survey reported that female-managed hedge funds outperformed male-managed hedge funds by 55 per cent in the past nine years. However, only 3 per cent of hedge funds are managed by women. Ms. Lofton says that while Wall Street has historically been and continues to be a boys club, this is slowly changing. Part of that change will come from parents taking the initiative and helping their young daughters invest.
Lauren Templeton, the great-niece of the legendary investor Sir John Templeton, started investing at seven (four years earlier than Mr. Buffett who began at age 11). Her parents said they would buy her one share of any company she wanted. She chose Disney. She remembers hanging this stock certificate, and the ones that would follow, on her bedroom wall and telling the kids on the playground that she owned Disney. She now runs her own asset management firm based out of Chattanooga, Tenn.
Having an investing family helps but you don't have to work on Wall Street to make investing relatable to your children. If your Disney-loving daughter makes the same choice, purchase one share for her. Then get out the Crayola markers and create a stock certificate to hang amongst posters of her favorite Disney princesses.
Opportunities to talk investing with your children abound on a daily basis. Money manager Candace King Weir and her daughter Amelia Weir run Paradigm Capital Management. Amelia Weir says shopping with her mom as a child was never just a trip to the mall. Her mom was always asking questions. If a store is crowded, is it the next big thing? If they have a sale, are they getting their merchandising all wrong? Investment opportunities and potential points of discussion arise every day. Starting our daughters investing early is one way to increase the number of women working in the financial world. It also helps with everyday personal finance issues, spurring women to take a more active role in household investment decisions.
Of course, studies on women and investing only started popping up in the last ten years. The first reference from Ms. Lofton's book is a study from 2001 while studies on investors like Mr. Buffett go back decades. "Warren Buffett has been investing like a girl this whole time, we just didn't have the literature to prove it," Ms. Lofton says.
She hopes women will read her book and find the inspiration to become the next great investor. Perhaps ten years from now, there will be a slew of recognizable females on "The Great Investors" list.