Is the ‘fairer sex’ cannier?
Harriett Harman has drawn a lot of flak this week over her comment that the financial crisis might not have happened if Lehman Brothers had been Lehman Sisters. And rightly so: her “men are thick” approach comes across as chippy, patronising to people of both sexes, and is pretty much guaranteed to rub almost anyone who reads her comments up the wrong way.
That’s a pity. Because in some ways, she has a point. A range of studies over the years has shown that women tend to be better investors thanmen . In 2001 for example, US finance professors Brad Barber and Terrance Odean found after analysing seven years’ worth of trading data from a stockbroker that women’s risk-adjusted returns beat those of men by an average of about one percentage point a year.
Why the big gap? It comes down to a couple of key factors: women traded less, and they were also less keen to take risks, focusing more on preserving capital.
Now you can get too caught up explaining this with a lot of pseudo-scientific twaddle. The financial world suffers from a surfeit of testosterone, no doubt about it.
• Read the full editor’s letter here: Is the ‘fairer sex’ cannier?