Recently, some people have been asking if Wall Street, Big Shitpile and the other elements of the Great Pandimensional Economic Clusterfuck of 2008-2009 would have been as bad if women were more common on Wall Street. My answer: absolutely not. What follows are some personal experiences as to why I think this.
Many years ago (OK, around 2000), when people, by and large, still respected Wall Street and investment bankers*, I was often told I was being wimpy for putting most of my 401(k) money into U.S. securities and bonds (GIRLIE MAN!), instead of stocks and other high-risk, high-yield investments (balls, dude!). Here was my thinking at the time (and it really hasn’t changed much since then):
1) I thought stocks were overvalued. When you looked at the price-earnings ratios, across the board, they were far too high. Unless you believed that the entire board was suffering from temporary underperformance or had superb future earning potential, this was a collapse waiting to happen–and trying to predict its exact timing was foolish (see point #2). I’m sure there were some diamonds-in-the-rough or ugly ducklings, but I, nor most of the people giving me ‘advice’, were paying close enough attention to find them–and if you’re buying an index fund, by definition, most of your money isn’t going to those stocks. Which brings me to point #2….
2) I’m not paying enough attention (you’re probably not either). I’m sure if you’re following the market (i.e., you’re a professional), you might get in at the right time and get out at the right time (although many professionals don’t seem to have timed it right either….). But I have TEH SCIENTISMZ!! to do. I’m not paying close enough attention (nor should I). Part-time amateurs shouldn’t swim with the sharks. Know when you’re out of your league and walk away. Everybody can’t be the toughest guy around…
3) Machismo is not an investment strategy. When I mentioned what and why I chose the strategy I did, I often received subtle barbs about how I wasn’t being aggressive enough (OH NOES!! MAH PENIS FELL OFF!). Women usually weren’t this obnoxious, and actually considered what I was saying. Which brings me to point #4….
4) When someone is disagreeing with you in order to internally justify his own actions, more than trying to persuade you, do the opposite of whatever he’s telling you to do. Mixing ego and feelings of self-worth with money is profoundly stupid–and in my experience, usually a male trait, not a female one.
Having said that, while I put most of money, meager as that most was, in a bond fund, I did put a little in a ‘high performance’ fund. This means I receive both prospectuses and can compare their performances. So let’s see how the
Look at My Huge Swinging Cock, You Pencil Dick Wimp! Vanguard 500 Index Fund did (it contains stocks):
That’s right, in nominal dollars, you lost money. In 2000 dollars, your $10,000 investment declined to $7,236.77, losing 28%. And don’t forget the fees! Meanwhile, onto the
You Lack a Pair of Balls, You Wimp! Vanguard Inflation-Protected Securities Fund Index Fund (which contains government and government-backed securities):
That’s pretty darn good, especially when you consider I didn’t actually do anything to earn this income, other than check the appropriate box on a form. Not very manly, I know–investing, CNBC propaganda notwithstanding, isn’t cowboys or chainsaws. Use brains, not balls. For those keeping score at home, in 2001 dollars (that’s when this fund began), if you started with $10,000, you wound up with $15,895, for a total increase of 59%.
Even worse, this difference wasn’t due to the current depression, since stocks underperformed bonds from 2001 to 2007. They just haven’t done well due to the underlying fundamentals.
Again, if you’re sharp, you might find an angle (or you can always co-opt government regulators and make your own angle). But probably not: there are no free lunches or magic money machines; most of us actually have to earn our money. In my experience, women seemed much less influenced by ego-driven magical thinking than men–and that observation is borne out in a study of amateur investors. The point of this post isn’t to impress you with how smart I am (because I’m not), but to note that ego and bluster have no place in planning your retirement or managing your money.
If you’ve been looking at the figures, you might think, “But Mad Biologist, the one-year return on the 500 Index fund is really high. You’re not being fair. Besides, there are plenty of ten-year historical windows where stocks outperformed securities.” Regarding the last part, do you think you’re smart enough to find those ten-year windows? Because many reasonably intelligent people weren’t.
As to fairness, well, there’s a shortage of fairness going around: just ask a stocks-heavy 63 year old….
*Crazy, wasn’t it?