This week, the five-year anniversary of the financial crisis is creating buzz and sparking memories, including here at The Motley Fool. One issue may be running under the radar, though, and it may dis(respect) some of the best minds on Wall Street.
On Wall Street, the financial crisis may have caused a different kind of shake-up than the ones many of us hoped for, or even expected. For one reason or another, many females ended up out of Wall Street’s door. Worse, many high-ranking female managers made the first cut — pink-slip wise — during the crisis. Apparently, a lot of factors resulted in a diversity drain on the Street.
The purge
Recent Bloomberg Businessweek and The Atlantic articles explore Wall Street’s female exodus. The Bloomberg Businessweek post gives a striking introduction: “The financial crisis that began almost exactly five years ago marked one of the most thorough purges of women from the upper levels of Wall Street in memory.”
Sadly enough, the stereotype of Wall Street’s best, most engaged minds may be a largely engrained attitude few would publicly state. How many silently believe that? This past summer, controversy flared when hedge-fund manager Paul Tudor Jones made some comments aloud during what was meant to be a gathering closed to the media. A few highlights: motherhood is a “killer,” and, “As soon as that baby’s lips touched that girl’s bosom, forget it.”
The tragedy of losing female investors has fallen on deaf ears for too long. There’s nothing wrong with female investors’ returns. They certainly aren’t worse than men’s investing performance, and some studies show they’re even much better. Wall Street and regular investors likely have some elements of the art and science of investing all wrong, and women have plenty of advantages.
Analysis from Financial Analyst Journal reveals, “Women’s analysts’ recommendations demonstrated a better rate of return compared to risk versus the men’s.” Regardless, an analysis of brokerage firms between 1994 and 2005 revealed that only one in six analysts at all the major brokerages were female.
Where the girls are (delivering returns under the radar)
There’s a reason why the Motley Fool is “motley.” We embrace many viewpoints and different types of people in our community and subscriber base. As for women in investing, my colleague LouAnn Lofton wrote an entire book on the topic: Warren Buffett Invests like a Girl.
Studies show that many women possess the oft-sought “temperament” Buffett has pointed out makes successful investors. And, of course, Buffett is no fly by-night trader — he’s the most respected modern investor.
Some of Lofton’s important points:
Women deeply research their stock ideas and investments.
Men trade 45% more than women do, a frenetic habit that actually shrinks their net returns.
Not to be rude to gentlemen, but women’s lack of testosterone is a feature, not a flaw.
Testosterone increases risk-taking behavior. That can nail investment returns, not to mention business well-being. And we do know that the insane levels of risky behavior — and related groupthink — helped build the financial crisis.
When it came to all the questions during the chaotic crisis, letting intelligent and talented women slip out of the ranks — not to mention forcing them out — was not the right answer.
Setting good examples
More females are taking high-ranking, high-stakes positions, even if overall progress for women has remained sadly slow. Marissa Mayer was brought in as Chief Executive Officer of Yahoo! Inc. (NASDAQ:YHOO), a company that has struggled for years. Earlier this week, the stock reversed a downward trend that existed even before the financial crisis. It has tiptoed above the $30 mark.
Of course, stock price isn’t all, and shouldn’t be. Mayer also shared some impressive news recently that’s a good sign for revitalization of the real fundamental business. Yahoo! Inc. (NASDAQ:YHOO)’s online presence has recently clocked a 20% surge in monthly users — a total 800 million. Mayer is showing positive signs about reversing Yahoo! Inc. (NASDAQ:YHOO)’s fortunes.
