Women are incredible investors. In fact, research shows that women outperform men when it comes to investment returns per unit of risk (this means that women do a better job investing than men when you account for the amount of risk they are taking with the investment). Interestingly, this holds true for retail investors (non-professionals) and professional investors overall.

A Quick Look at Women and Investing

Two women who are left out of the ‘Best Of’ investor lists are Anne Schieber and Hetty Green. Let’s find out what made them so awesome.

Anne Schieber (made an 18% compound annual rate of return over 50 years)

Anne Schieber, put herself through school in the evenings, worked at the IRS for decades, and retired at the age of 51. After retirement, she invested $5000 into the stock market and when she died at the age of 101, she had turned it into a bouquet of financial products worth over 22 million dollars. 

Her rate of return is argued about somewhat, but this puts her in the league of the Benjamin Grahams of the world (hailed the father of value investing). 

Incredibly, Anne Shieber was a self-taught investor. She did all her own research. She read the company’s tax returns and attended annual general meetings. She bought companies she felt generated good returns for their owners. And she generally employed a buy-and-hold strategy. This is where you buy a stock and continue to hold it for a long time (rather than selling it).

When she passed away, she left $22 million dollars as a scholarship to Yeshiva University’s Stern College for Women.

Hetty Green

“I buy when things are low and no one wants them. I keep them, just as I keep a considerable number of diamonds on hand until they go up and people are anxious to buy...I never speculate.”

- Hetty Green, The Queen of Wall Street (1905)

Green was an early value investor, (before Ben Graham and Warren Buffet made this style of investing popular). Value investing is the practice of buying things when they are out of favour with other investors, at very low prices and holding them until they come back into fashion. Some speculate that Hetty Green was the greatest investor of all time.

While she had an advantageous start because she came from a wealthy family; she grew that wealth and became the richest woman in the world with her estate being worth more than $100 million dollars when she died (the equivalent of $2.7 billion today).

Hetty Green’s accomplishments are even more impressive when you consider that she made all these investments at a time when her gender prevented her from having a seat on the stock exchange, or sitting on any corporate boards, she didn’t even have the right to vote.

“In a February 1900 interview with Woman’s Home Companion, Hetty recalled these obstacles, stating, “A woman hasn’t as many chances for making money as men have...She isn’t around or among men, as a rule, and she doesn’t hear of the opportunities for investment which are talked of day by day, in Wall Street and other financial centers.”

When the stock market collapsed in 1973, she placed huge orders and reaped the benefits when the market later recovered. In 1907 when there was a run on the banks, and J.P. Morgan organized his famous library meeting, the only woman in attendance was Hetty Green. As the city of New York was on the brink of bankruptcy, it was Hetty who personally loaned the city over $5.6 million throughout the year (though it was only her last loan of $1.1 million that is mentioned in most publications, if at all, and most forget to note that she had made other loans to the city in both 1898 and 1901).

She was an outsized figure in the Morgan, Carnegie and Rockefeller era, but is seldom listed alongside these tycoons.

Inspired?

Do you want to be a great investor like these incredible women? Many of the strategies used by investors in the olden days are less successful today because information is more readily available, making it harder to take advantage of market dislocations.

However, it is easier than ever to buy a diversified bouquet of financial products and to get your money working for you by owning a small piece of many different companies (stocks) and many different loans (bonds).

The following are factors that contribute to women’s performance advantage:

1. Keeping it simple – most women employ a buy-and-hold for the long-term strategy. This avoids the fees and taxes that come with repositioning cash into other investments (a significant, but often unaccounted-for impact of most investment strategies).

2. Time in the market instead of Timing the Market: Buying and holding also removes the temptation to ‘time the market’ (finding the perfect time to buy and sell). Trying to time the market, or being unable to time the market, is one of the main reasons that otherwise well-thought-out strategies fail (learn more in the book: A Random Walk Down Wallstreet).

3. Calm heads prevail – just like Hetty Green took advantage of low prices after the panic of 1973, anecdotal evidence demonstrates that women do a better job of buying low, when markets are in turmoil. (From the famous Buy Low, Sell High adage). The most recent indication of this is that female-focused investment firm Ellevest saw net inflows doing the Covid crisis market downturn. Not being included in whisper markets the moment-to-moment vicissitudes of the stock market is actually a great thing. Sisterly advice: research shows that the more often you look at your investments, the worse the financial decisions you make will be. Invest for the long term (10+ years) and check your investments once a year.

Start today. Time is your biggest advantage when it comes to your finances. 

Balance the risk you’re taking with your money today, with the very real risk that you will outlive your money. Make sure you’re getting your money working for you hard enough to get you to where you want to be. Both these women had around 60% of their wealth in the stock market at the time of their deaths.

Repeat after me: Women Are Great With Money!