What Buffet and women have in common

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18 Jan 2013

Early this year, I spoke to some women about their 2013 financial goals.

Female investors tend to put in more time and effort researching possible investments considering every angle and detail as well as considering alternate points of view.

Read the article here.

They mostly wanted to save and invest money although the majority of these women were not quite sure how they would structure their savings or investments.

I was reminded about the advice I read from the book entitled: “Warren Buffet invests like a girl – and why you should too” written by Louann Lofton of The Motley Fool.

Again, its advice that many of us have heard before, we read article about it but good news is always worth telling over and again.

Warren Buffet says the most important rule is not to lose money. Rule number two is never forget rule number one.

Put it this way, when investing, your focus should not only be about making money but also about not losing money, that’s how I make sense of these two rules.

Investing money is about patience. Just because you bought shares in a company today or a property, does not mean you become wealthy the next day.

Good investors who observe rule one and two think long-term, they are also sensible, never mind the fact that they read a lot of financial literature.

It’s also important to remember that good investments are bought at low prices and sold at high ones.

In a bid to make returns on your investment, you are bound to make mistakes. Buffet says there is no point in beating yourself about it when you slip up.

“Think about what you can reasonably do differently in the future.”

Author Lofton reveals the female traits that Buffet possesses, making him one of the most respected investors of our time.

On buying, Buffet says: “Price is what you pay. Value is what you get.”

According to Lofton, as a result of their approach to investing and their temperaments, female investors also produce results that are more consistent and persistent.

Before delving into these traits, ignorance is absolutely no excuse. We live in a digital world nowadays and a click gives us access to any information we need anywhere in the world.

You may have found the company in which you want to invest in, but ask as many questions as possible until you feel satisfied with the responses you get.

If you have done this and are still not satisfied, you may very well have to hire help – financial advisers will be able to guide you through the buying process and the markets, ultimately, the decision to invest lies with you.

On buying, Buffet says: “Price is what you pay. Value is what you get.”

Prices tend to fluctuate wildly whereas value shifts more slowly.

Investors who take a firm grip on valuation will be able to tell the difference between a price that is expensive and one that represents a bargain, says financial writer, Robert Cole.

Back to Buffet and female investors, Lofton talks about eight essential principles every investor needs to create a profitable portfolio.

According to Lofton, as a result of their approach to investing and their temperaments, female investors also produce results that are more consistent and persistent.

Female investors tend to:

1. Trade less than men do

2. Exhibit less confidence – men think they know more than they do while women are more likely to know what they don’t know

3. Shun risk more than male investors do.

4. Be less optimistic and therefore more realistic than their male counterparts

5. Put in more time and effort researching possible investments considering every angle and detail as well as considering alternate points of view.

6. Be more immune to peer pressure and tend to make decisions the same way regardless of who’s watching

7. Learn from their mistakes

8. Have less testosterone than men do, making them less willing to take extreme risks, which in turn could tend to less extreme market cycles

It’s not rocket science, women take time to find out more about a potential investment before they put money into that particular deal.

If Buffet can do it, so can we. Always think about the power of compound interest when investing. Give your investments time to grow and you will be greatly rewarded. – Denise Mhlanga

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